Univ.^f  111.  Library 
5fT 

37  THE 

Cincinnati  Southern 

RAILWAY. 


REPORTS,  EDITORIALS, 

And  Other  Articles  Relating  Thereto. 


What  is  the  use  of  making  a hair-splitting 
argument  to  show  that  under  the  law  it  is 
possible  to  sell  the  Southern  Railroad?  The 
question  is  do  we  want  to  sell?  Before  the 
railroad  was  built,  more  than  20  years  ago, 
there  was  much  discussion  as  to  the  consti- 
tutional right  of  Cincinnati  to  go  into  such 
an  enterprise,  and  there  was  much  dispute, 
too,  as  to  the  propriety  of  the  work.  That 
is  all  past.  The  railroad  has  been  a good 
thing  for  Cincinnati.  It  has  paid  largely  on 
the  investment.  It  is  still  a good  thing,  because 
the  city  controls  it.  It  is  one  of  the  most  im- 
portant arteries  of  our  commerce.  It  was 
constructed  to  overcome  discrimination 
against  us  in  the  Southern  trade.  It  was  built 
for  Cincinnati  and  has  served  Cincinnati  well. 
The  only  way  to  insure  lhat  it  will  continue 
as  a Cincinnati  institution  is  for  the  city  to 
retain  control. — Enquirer,  March  2,  ’96. 


. 


University  of 
Illinois  Library 
at  Urbana-Champaign 
Oak  Street 


THE 

Cincinnati  Southern 

RAILWAY. 


REPORTS.  EDITORIALS, 


And  Other  Articles  Relating  Thereto. 


From  Cincinnati  Times-Star,  February  20,  1896. 


CINCINNATI. — “What  Others  Want  Must  be  a Good  Thing  for  Me  to  Keep. 


V. 


REPORT  OF  THE  CHAMBER  OF  COMMERCE 
COMMITTEE  ON  THE  SOUTHERN  RAILWAY. 


Cincinnati,  June  17,  1891. 

Col.  Lowe  Emerson,  President  Cincinnati  Chamber  of  Com- 
merce and  Merchants’  Exchange : 

Dear  Sir — Yonr  committee  beg  leave  to  report  that 
they  have  had  under  consideration  the  subject  of  leasing 
or  selling  the  Cincinnati  Southern  Railway,  as  suggested 
by  Mr.  M.  E.  Ingalls  in  his  address  before  the  Commercial 
Club,  with  similar  committees  from  the  Board  of  Trade, 
Commercial  Club,  Freight  Bureau,  and  Builders’  Ex- 
change, acting  as  a Joint  Committee.  This  Joint  Com- 
mittee has  held  several  meetings,  and,  after  a full  discussion 
of  the  matter,  it  was  referred  to  a sub-committee,  consist- 
ing of  Messrs.  Gazzam  Gano,  J.  J.  Hooker,  A.  B.  Voorheis, 
J.  M.  Robinson  and  Archibald  Colter,  to  formulate  a report, 
which  is  herewith  submitted  for  the  consideration  of  the 
body,  and  which  the  committee  recommend  the  adop- 
tion of. 

(Signed)  James  Dalton, 

Gazzam  Gano, 

Charles  Fleischmann, 
Michael  Ryan, 

Richard  Dymond, 


Cincinnati,  June  15,  1891. 
Hon.  James  Dalton,  Chairman; 

Dear  Sir — The  sub-committee  from  the  General  Com- 
mittee, composed  of  representatives  from  the  Chamber  of 
Commerce,  Commercial  Club,  Board  of  Trade,  Builders’ 
Exchange,  and  Freight  Bureau,  appointed  by  the  various 


3 


bodies  to  consider  the  subject  of  a sale  or  extension  of 
the  lease  of  the  Cincinnati  Southern  Railway,  beg  leave 
to  report  as  follows  : 

As  to  the  Sale:  With  the  present  lease  in  effect, 
the  sale  of  the  road  could  only  be  made  to  the  present 
lessees,  and  it  goes  without  saying  that  under  the  cir- 
cumstances the  city  would  be  placed  at  a serious  disad- 
vantage. Were  it  possible  for  the  present  lessees  to  ob- 
tain legislation  modifying  their  charters  so  as  to  author- 
ize the  purchase  of  the  road  outright  (for  it  is  presumed 
they  have  no  such  authority),  and  could  finance  in  such  a 
way  as  to  be  able  to  pay  over  to  the  city  the  value  of 
the  road,  would  it  be  desirable  from  any  point  of  view 
that  the  city  should  come  into  possession  of  this  large? 
sum  of  money?  The  city,  or  its  trustees,  having  no  power 
to  sell  under  existing  laws,  would  necessitate  legislation, 
not  only  in  our  own  state,  but  in  Kentucky  and  Tennessee,  a 
submission  of  the  question  to  the  electors  of  the  city, 
and  the  unanimous  consent  of  the  bondholders  holding  a 
first  lien  upon  the  road.  To  secure  the  requisite  legis- 
lation for  the  purpose  would  consume  time  and  be  at- 
tended with  expense,  and  the  unanimous  consent  of  the 
bondholders  would  apparently  be  an  impossible  thing  to 
secure.  Thus,  after  the  necessary  laws  were  secured,  and 
the  consent  of  the  electors  of  the  city  had  to  the  terms  of 
sale,  the  refusal  of  one  or  more  of  the  bondholders  to  ac- 
cept a transfer  of  security  would  defeat  a sale. 

As  to  Extension  of  the  Lease  : The  act  of  March 
6,  1889,  authorizes  the  Trustees  of  the  Railway,  with  the 
approval  of  a majority  of  the  Trustees  of  the  Sinking 
Fuud,  to  extend  the  lease  at  a rental  of  not  less  than 
$1,250,000  per  annum  from  the  termination  of  the  present 
lease — October  12,  1906 — provided  that  said  extension 
shall  be  made  within  three  years  from  the  passage  of  the  . 
act ; so  that,  under  the  powers  now  held  by  the  trustees 
to  extend  the  lease,  it  will  be  necessary  to  act  on  or  before 
March  8,  1892. 

The  same  act,  without  any  limit  as  to  time,  grants 
authority  to  the  Sinking  Fund  Trustees  to  extend  the  pay- 
ment of  the  bonds  for  a period  not  exceeding  forty  years, 


4 


provided  they  can  arrange  with  the  holders  of  any  portion 
of  said  bonds  at  a rate  of  interest  not  to  exceed  four 
per  cent,  per  annum.  Even  if  this  is  not  practicable, 
and  can  not  be  accomplished  by  the  Trustees  of  the  Sink- 
ing Fund,  with  the  lease  extended  perpetually  at  not  less 
than  $1,250,000  per  annum,  by  the  time  the  bonds  mature, 
the  prospects  are  that  at  the  rate  of  interest  at  which  they 
can  then  be  refunded,  the  net  income  to  the  city  will  be 
$500,000  at  least.  With  this  a sinking  fund  can  be  ac- 
cumulated that  will  eventually  pay  all  the  bonds  of  Cin- 
cinnati, leaving  the  city  practically  free  from  debt. 

Thus,  for  this  reason  and  because  the  extension  of  the 
lease  will  benefit  the  lessees  of  the  road,  whose  interests 
are  to  a great  extent  our  interests,  your  Committee  are 
unanimously  of  the  opinion  that  the  best  interests  of  the 
oity  will  be  subserved  by  an  extension  of  the  lease  perpet- 
ually, with  certain  modifications  to  the  existing  lease  that 
experience  under  it  and  the  changed  condition  of  railroad 
operation  in  the  South  demands ; and  as  the  power  granted 
the  trustees  to  extend  the  lease  under  the  act  of  1889  ex- 
pires in  about  nine  months  from  the  present  month,  no 
time  should  be  lost  in  arranging  to  carry  out  its  provis- 
ions. 

The  proposition  that  the  city  advance  a certain  sum 
of  money  to  provide  terminals  and  for  the  betterments  of 
the  road,  we  are  constrained  to  believe,  would  not  be  a 
popular  measure  in  Cincinnati would  also  require  addi- 
tional legislation,  and  your  Committee  is  of  the  opinion 
that  this  should  not  be  considered. 

In  the  original  conception  and  construction  of  the 
Cincinnati  Southern  Railway  it  was  in  the  minds  of  the 
people  to  fortify  the  commercial  position  of  Cincinnati  by 
improving  the  lines  of  communication  with  the  South,  and 
to  secure  to  her  merchants  and  manufacturers  greatly- 
needed  facilities  for  reaching  that  growing  and  prosperous 
section,  and  at  the  same  time  to  make  an  investment  that 
would  be  self-supporting,  if  not  a source  of  profit. 

To  the  completion  of  the  Cincinnati  Southern  Railway 
may  be  traced  the  conditions  which  have  stimulated  the 
growth  of  the  Louisville  & Nashville  System,  and  the  aban- 


5 


donment  by  its  management  of  the  narrow  policy  which 
prevailed  at  the  time  when  Cincinnati  was  without  a South- 
ern railroad,  which  has  changed  it  from  a local  road,  ter- 
minating at  the  Falls  of  the  Ohio,  to  the  great  system, 
with  its  real  terminus  and  future  headquarters  at  Cincinnati. 

The  somewhat  remarkable  earnings  per  mile  of  the 
Cincinnati  Southern  Railway  Company  finally  attracted 
the  attention  of  those  in  control  of  the  East  Tennessee, 
Virginia  & Georgia  Railroad,  a line  which  has  always  been 
operated  as  an  east  and  west  line.  The  mileage  earnings 
of  the  East  Tennessee,  Virginia  & Georgia  Company  hav- 
ing been  only  about  forty  per  cent,  of  the  Cincinnati 
Southern  Company,  and  the  foresight  of  its  owners  in  se- 
curing the  control  of  the  Cincinnati  Southern,  and  propos- 
ing to  carry  out  the  announced  policy  of  making  the  two 
systems  a north  and  south  one,  is  only  an  additional  indi- 
cation of  their  remarkable  capacity  for  railroad  manage- 
ment. 

When  it  is  considered  that  the  Cincinnati  Southern 
has  scarcely  a mile  of  branch  roads,  it  can  readily  be  seen 
that  with  the  improved  terminals,  increased  sidings  and 
other  facilities,  a perpetual  lease  would  justify  the  leasing 
company  in  providing,  and  the  tributary  territory  that  will 
be  opened  up  by  the  present  East  Tennessee  systems,  that 
there  could  scarcely  be  a doubt  of  its  capacity  to  earn  the 
increased  rental  provided  in  the  lease. 

In  fact,  your  Committee  are  of  the  opinion  that  there 
should  be  a provision  in  the  lease  that  when  the  gross 
earnings  exceed  a certain  amount  per  mile  a certain  per- 
centage of  the  surplus  should  come  to  the  city  as  increased 
rental,  these  figures  to  be  fixed  by  the  parties  to  the  lease 
as  may  be  hereafter  agreed ; also  that  provisions  should  be 
made  that  will  admit  of  a greater  distribution  of  the  prod- 
ucts of  Cincinnati  and  of  the  entire  Ohio  Valley  than  was 
possible  under  past  conditions,  and  to  an  extent  that  would 
justify  the  reasonable  anticipations  of  the  mercantile  and 
manufacturing  interests,  and  to  counteract  the  traffic  ar- 
rangements that  were  made  by  ant  agonistic  lines  in  antici- 
pation of  the  completion  of  the  Cincinnati  Southern,  which 
still  exist,  greatly  to  the  detriment  of  Cincinnati. 


6 


While  there  is  a provision  in  the  lease  at  present  that 
“ Cincinnati  shall  not  be  discriminated  against,”  your  Com- 
mittee are  of  the  opinion,  in  view  of  the  valuable  conces- 
sions proposed  to  the  present  lessees  in  offering  a perpet- 
ual lease,  that  there  should  be  embodied  in  the  new  lease  a 
specific  covenant  more  plainly  embodying  that  provision, 
to  take  effect  at  once,  providing  that  to  the  following  cer- 
tain points  upon  the  line  of  the  Cincinnati  Southern,  and 
of  the  two  companies  which  propose  to  guarantee  the  faith- 
ful obligation  under  the  lease,  the  East  Tennessee,  Vir- 
ginia & Georgia  and  the  Alabama  & Great  Southern,  that 
the  rates  from  Cincinnati  shall  not  exceed  the  percentage 
named  of  the  rate  from  New  York  by  any  line  or  combina- 
tion of  lines  to 

Knoxville  & Chattanooga 45 % of  the  rate  from  New  York. 

Rome 50%  “ “ “ 

Atlanta  60%  “ “ “ 

Birmingham 60%  “ “ “ 

Selma.: 65%  “ 

Anniston  60%  “ “ “ 

Meridian 65%  “ “ “ 

In  asking  that  the  lessees  of  the  Southern  Railway 
covenant  this  in  specific  terms,  we  ask  that  which  we  be- 
lieve they,  as  far-sighted  business  men,  will  recognize  as 
having  compensating  advantages  in  the  increased  value 
and  volume  of  their  traffic,  and  to  which  they  will  cheer- 
fully agree.  Your  Committee  does  not  think  that  this 
stipulation  involves  the  abandonment  by  said  lessees  of 
any  existing  right,  or  abridgment  of  any  proper  liberty  in 
the  management  of  their  property,  but  that  it  is  just  and 
reasonable. 

It  requires  no  prophet  to  predict  that  the  best  inter- 
ests of  the  owners  of  railroad  property  lie  in  a consolida- 
tion of  interests,  whereby  the  transportation  business  to 
certain  sections  shall  be  absolutely  under  control  and  with- 
out competition.  Giant  strides  have  been  made  in  this  di- 
rection within  the  past  five  years,  but  the  combinations 
likely  to  be  brought  about  in  the  next  ten  years  will 
throw  what  has  been  done  in  this  direction  in  the  shade. 

Rumors  even  now  are  rife  of  consolidation  which, 
would  absolutely  control  every  pound  of  traffic  south  of 
the  Ohio  river  and  east  of  Cairo  and  the  Mississippi  state 


7 


line.  These  combinations  are  made  not  in  the  interest 
of  the  public,  but  in  the  interest  of  the  owners  of  railroad 
property;  and  to  provide  against  the  consequences  that 
will  result  from  such  combinations  your  Commi  tee  are  op- 
posed in  the  strongest  terms  to  any  extension  of  the  lease 
without  a provision  for  the  protection  in  rates  of  freight,  as 
mentioned  above. 

The  city  had  far  better  assume  all  the  risks  of  finding 
a lessee  for  the  road  at  the  expiration  of  the  present  lease 
than  to  extend  it  without  these  provisions. 

Respectfully  submitted, 

(Signed)  Gazzam  Gano, 

A.  B.  Votfrheis, 

James  J.  Hooker, 
James  M.  Robinson, 
Arch.  Colter. 

The  consideration  of  the  foregoing  is  made  the  special 
order  for  Wednesday,  June  24,  1891,  at  1:15  p.  m. 

EXTRACT  FROM  RECORDS  OF  CHAMBER  OF  COMMERCE, 
JUNE  24th,  1891. 

Upon  motion,  the  report  of  the  Committee  was  adopted  without  dis- 
cussion, and  referred  to  the  Trustees  of  the  Railroad,  and  the  Trustees  of 
the  Sinking  Fund. 

✓ ' 

FROM  THE  CINCINNATI  ENQUIRER,  FEBRUARY 

3,  1895. 


Tabled  and  Practically  Killed — Fate  of  the  Obnoxious 
Alabama  Railway  Bill,  Which  so  Seriously  Threat- 
ened Cincinnati  Interests — Departure  of  a Local 
Committee  For  Montgomery. 

— 

Birmingham,  Ala.,  Sunday,  February  2,  1895 — The 
railroad  monopoly  bill,  which  proposed  to  allow  the  for- 
eign holder,  whether  he  be  a stockholder  in  the  Alabama 
corporation  or  not,  to  vote  in  the  election  of  Directors 
for  the  Alabama  corporation,  and  by  the  passage  of  which 
by  the  Legislature  the  Southern  Railway  Company  ex- 
pected to  euchre  the  Cincinnati,  Hamilton  & Dayton  out 
of  the  Alabama  Great  Southern  Railroad,  was  killed  in  the 
House  at  Montgomery  this  afternoon. 

8 


A week  ago  two  bills  were  introduced  in  the  Legisla- 
ture in  each  branch.  Their  provisions  were  identical. 
The  Senate  bill,  introduced  by  President  Pettus,  passed 
that  body  last  Saturday  without  discussion.  Not  until  it 
had  passed  the  Senate  were  its  provisions  discovered  by 
those  who  opposed  its  objects.  On  Monday  a similar  bill, 
which  had  been  introduced  in  the  House  by  Representative 
Weller,  came  up  and  was  rushed  through  Tuesday,  despite 
the  protests  of  the  Commercial  Club  of  Birmingham,  who 
meanwhile  had  discovered  its  purport  and  wired  to  the  rep- 
resentatives from  this  county  to  fight  it. 

A strong  committee  was  sent  from  here,  but  were 
met  by  a stronger  body  of  the  Southern  Railway  in  Mont- 
gomery. The  committee  succeeded  in  stopping  the  Sen- 
ate bill  in  the  ’ House,  but  the  House  bill  passed  both 
branches,  being  amended  in  the  Senate  and  passed  that 
body  yesterday.  The  amending  of  it  in  the  Senate  took 
it  back  to  the  blouse,  where  it  came  up  again  to-day. 

Meanwhile  Governor  Oates  and  members  of  the  Leg- 
islature had  been  flooded  with  protests  against  the  meas- 
ure, the  full  injustice  of  which  had  not  before  been  made 
clear  either  to  the  Governor  or  to  the  legislators  who  had 
but  one  side  of  it.  This  afternoon  when  the  House  bill 
came  back  amended  from  the  Senate  for  concurrence,  Rep- 
resentative O’Brien  moved  that  the  bill  and  amendments 
be  tabled.  The  motion  prevailed  by  a vote  of  46  to  22. 
This  effectually  kills  the  obnoxious  measure. 


When  the  action  was  taken  in  the  Alabama  Legisla- 
ture, as  described  in  the  above  special  dispatch  to  The 
Enquirer,  word  was  immediately  sent  by  the  Commercial 
Club  of  Birmingham  to  the  Chamber  of  Commerce  of  this 
city,  stating  the  fact  and  showing  that  it  was  unnecessary 
for  the  committee  to  go  down  to  wait  upon  the  Governor, 
as  decided  upon. 

When  this  message  was  received  by  Superintendent 
Murray  it  was  decided  to  communicate  with  the  Governor 
through  his  Private  Secretary,  asking  him  to  confirm  the 
report.  President  Glenn  then  received  an  answer  from 
Governor  Oates  that  the  bill  had  been  tabled  and  that  it 


9 


was  probable  that  it  would  be  taken  up  for  reconsideration. 
In  accordance  with  this  information  it  was  decided  best  for 
the  committee  to  make  the  visit  to  Governor  Oates  anyway* 
and  the  committee  left  last  night  at  8 o’clock  over  the 
Queen  & Crescent,  having  been  escorted  to  the  depot  by  a 
number  of  members  of  the  Chamber  of  Commerce,  headed 
by  Superintendent  Murray.  There  were  some  appointees 
that  were  unable  to  go.  The  delegation,  as  revised,  con- 
sisted of  W.  H.  Doane,  J.  L Workum,  Henry  L.  Goemann, 
C.  B.  Burkam  and  J.  M.  Kennedy.  The  committee  ex- 
pects to  return  on  Tuesday. 

The  Trustees  of  the  Cincinnati  Southern  have  also 
joined  in  urging  Governor  Oates  to  veto  the  bill  if  it 
reaches  his  desk  after  passing  both  branches  of  the  Leg- 
islature. These  Trustees,  appointed  to  protect  the  city’s 
property,  at  their  regular  meeting  yesterday  ordered  tele- 
graphed to  the  Governor  of  Alabama  the  following  dis- 
patch : 

Hon.  William  C.  Oates,  Governor  of  Alabama,  Mont- 
gomery, Ala. : The  Trustees  of  the  Cincinnati  Southern 
Bailway  respectfully  request  that  you  withhold  your  ap- 
proval of  the  act  of  the  General  Assembly  of  Alabama,  en- 
titled “An  act  to  provide  for  the  calling  and  holding  of 
meetings  of  stockholders  of  railroad  corporations  in  certain 
cases,  and  regulating  the  voting,  the  election  of  officers 
and  the  transaction  of  other  business  at  such  meetings,” 
until  a further  full  and  fair  consideration  can  be  had  of 
the  effect  of  this  act  upon  the  relations  between  the  Cin- 
cinnati Southern  Railway  and  the  Alabama  Great  Southern 
Railroad  as  links  in  the  through  line  between  Cincinnati 
and  New  Orleans,  as  well  as  other  points  in  Alabama,  Miss- 
issippi, Louisiana  and  Texas.  By  order  of  the  board. 

E.  A.  Ferguson,  President. 


10 


From  the  Commercial  Gazette,  March  23,  1895. 

THE  CINCINNATI  SOUTHERN  RAILROAD. 


The  Southern  Railroad  is  a great  improvement.  It  is 
with  us.  In  so  far  as  regards  the  connection  of  Cincinnati 
with  the  South  it  is  not  a disappointment. 

Its  cost,  as  measured  by  the  bonds  issued  for  its  con- 
struction, was  $18,600,000,  Its  actual  cost,  including  in- 
interest and  deficit  in  the  income,  may  be  stated  in  round 
figures  at  $28,000,000.  It  should  be  noted,  however,  that 
the  lessees  have  added  $3,000,000  to  the  value  of  the  prop- 
erty by  arching  tunnels,  relaying  tracks,  constructing  side- 
tracks and  building  depots.  This  was  done  in  accordance 
with  the  terms  of  the  lease,  and  is  all  the  property  of  the 
city.  Furthermore,  the  lease  is  secured  by  the  individual 
liability  of  the  stockholders  of  the  leasing  company,  and 
more  substantially  by  the  rolling  stock. 

This  is  the  situation  : 

The  rental,  which  is  a liberal  one,  has  always  been 
paid,  and  there  is  no  valid  reason  to  doubt  that  it  will  con- 
tinue to  be  paid,  and  that  when  business  becomes  normal 
the  lessees  will  find  a profit  rather  than  a loss. 

The  property  may  therefore  be  classed  as  a big  goose 
with  a big  show  of  feathers.  It  is  natural,  therefore,  that 
there  should  be  a desire  to  pluck  it.  From  the  outset  there 
was  a desire  to  pluck  it,  and  this  we  presume  will  continue 
to  be  exhibited.  It  is  somewhat  significant  to  notice  that 
the  parties  who  sought  through  designing  influences  to  ob- 
tain the  control  of  this  property  at  the  outset  through  a 
lease  are  still  alive  and  kicking,  and  screaming  precisely  as 
they  did  when  the  Trustees  leased  the  road  virtually  to  the 
Erlanger  syndicate.  It  may  be  remarked  in  this  connec- 
tion that  syndicates  of  that  character  seldom  die  and  never 
resign.  We  do  not  pretend  to  say  that  the  purpose  was 
originally  to  obtain  control  of  the  road  for  the  purpose  of 
wrecking  it.  All  readers  may  reach  their  own  conclusions. 

The  Board  of  Trustees  who  made  the  lease  was  com- 
posed of  Miles  Greenwood,  E.  A.  Ferguson,  R.  M.  Bishop, 


11 


Philip  Heidelbach  and  William  Hooper.  The  Board  was 
appointed  by  the  Superior  Court,  and  it  was  a strong  one. 
It  had  the  confidence  of  our  citizens,  and  no  one  will  ques- 
tion that  it  acted  in  the  interests  of  the  taxpayers  who 
owned  the  property.  They  were  themselves  at  the  time 
large  taxpayers.  That  was  never  a political  machine.  No 
board  appointed  by  the  Superior  Court  could  be  a political 
machine.  There  have  been  no  changes  in  that  Board  except 
through  death  or  resignation.  We  are  not  sure  that  Henry 
Mack  was  not  one  of  the  original  trustees,  blit  he  is  now  a 
trustee.  W.  W.  Scarborough  was  at  one  time  a trustee,  but 
he  resigned.  At  any  rate  the  trustees  from  the  beginning 
down  to  the  present  time  have  been  men  who  commanded 
the  confidence  of  the  people.  They  stand  as  the  repre- 
sentatives of  the  city.  Their  duty  is  to  see  that  the  terms 
of  the  lease  are  complied  with,  and  we  may  be  sure  that  the 
property  is  safe  in  their  hands. 

It  is  very  easy  to  say  that  the  property  has  run  down. 
It  is  always  much  easier  to  lie  about  it  than  it  is  to  tell  the 
truth.  Assertions  are  made  without  difficulty,  and  the 
more  a person  is  disposed  to  depart  from  the  line  of  accu- 
racy the  less  difficulty  he  experiences. 

The  fact  is,  the  Southern  Railroad  is  worth  more,  as 
measured  by  actual  expenditures,  to-day,  to  the  extent  of 
three  or  four  million  dollars,  than  it  was  when  handed  over 
to  the  lessees.  Stick  a pin  right  here  and  thus  mark  what 
is  to  be  said  about  it. 

It  is  claimed  by  the  goose  pluckers,  by  the  designing 
syndicates,  by  the  growlers,  and  by  the  defamers  of  Cin- 
cinnati, that  somehow  or  other  the  municipality  is  liable  to 
lose  this  property,  whereas  great  railroad  corporations  are 
contending  for  its  possession.  The  Cincinnati,  Hamilton 
and  Dayton  Railroad  Company  want  it  in  connection  with 
the  Alabama  Great  Southern.  It  virtually  has  it,  and  its 
actual  possession  depends  upon  technicalities  which  are 
pending  in  court. 

An  attempt  was  made  to  use  the  Alabama  Legislature 
for  the  purpose  of  defeating  the  plans  of  the  Cincinnati, 
Hamilton  and  Dayton  Railroad  Company,  but  that,  through 
the  veto  of  Governor  Oates,  was  overcome.*  In  this  condi- 

* See  page  8-10. 


12 


tion  of  affairs  it  is  not  worth  while  to  talk  about  the  failure 
of  our  Southern  Road  as  an  investment.  It  is  in  no  danger 
except  from  goose  pluckers,  from  schemers,  from  syndi- 
cates that  would  take  a copper  from  a dead  man’s  eyes 
without  any  conscientious  scruples. 

It  may  be  said  just  here  that  the  city  of  Cincinnati 
does  not  propose  that  anybody  shall  steal  this  valuable 
property.  It  is  ours.  We  built  it.  We  paid  for  it.  There 
is  no  danger  of  a receiver.  It  is  true  we  paid  for  it  in 
bonds,  but  these  are  good.  The  city  is  responsible  for  them, 
and  the  city  would  not  go  into  bankruptcy  even  should  it 
lose  its  investment  in  that  property.  At  this  point  stick 
another  pin. 

We  are  now  told  that  the  rental  does  not  pay  the  in- 
terest on  the  bonds  outstanding.  This  is  true.  But  why? 
Ten  million  dollars  of  the  bonds  outstanding  bear  interest 
at  the  rate  of  seven  and  three-tenths  per  cent.  Why  was 
such  an  exorbitant  interest  necessary?  It  was  not  so  exor- 
bitant then  as  it  seems  to  be  now.  But  still  it  was  higher 
than  in  other  cases.  But  this  was  due  to  the  kickers  and 
to  the  defamers  of  Cincinnati.  These  we  had  in  the  past, 
we  have  them  now,  and  we  apprehend  they  will  remain  as 
thorns  in  the  municipal  flesh. 

It  was  argued  first  that  the  act  authorizing  the  con- 
struction of  the  Southern  road  was  unconstitutional  This 
having  been  settled  by  the  Supreme  Court,  it  was  then  in- 
sisted that  the  road  would  never  pay;  that  it  was  a wild 
scheme,  and  that  it  would  ultimately  bankrupt  the  city. 
These  unpatriotic  assertions  were  printed  in  pamphlet  form 
and  diligently  circulated  among  foreign  investors.  The  lat- 
ter, feeling  there  was  a risk  about  it,  insisted  on  high  rates, 
and  it  thus  happened  that  the  first  ten  million  dollars  of 
bonds  issued  bear  interest  at  the  rate  of  seven  and  three- 
tenths  per  cent.  Subsequent  issues,  amounting  in  the  ag- 
gregate to  §8,600,000,  were  placed  at  six  per  cent.  This 
is  the  reason  why  the  rental  does  not  pay  the  interest  on 
the  bonds,  and  this  is  the  reason  why  Cincinnati  taxpayers 
are  required  annually  to  make  up  the  deficit.  Place  the 
responsibility  for  this  where  it  belongs,  and  in  thus  placing 
it,  the  measure  of  those  who  are  now  depreciating  the  prop- 


13 


erty  and  insisting  on  its  sale  at  a time  when  no  solvent  per- 
son would  undertake  to  sell  anything,  may  readily  be  taken* 

It  happens,  fortunately,  that  in  1902,  or  seven  years 
hence,  the  $10,000,000  seven  and  three-tenths  bonds  be- 
come matured.  A few  years  later  the  $8,600,000  six  per 
cent  bonds  mature.  These  could  now  be  refunded  by  the 
city  of  Cincinnati,  without  any  mortgage  on  the  Southern 
road,  at  four  per  cent.  Now  let  us  see  how  that  would 
figure. 

Four  cent  on  $18,600,000  would  be  $744,000  against 
a rental  of  $1,200,000.  That  would  leave  a net  profit  to  the 
city  of  $456,000  per  annum.  This  is  not  guess  work.  It 
is  based  on  facts,  and  the  figures  can  not  be  made  to  lie  by 
even  the  most  unscrupulous  manipulator.  Would  it  be 
wise,  therefore,  to  sell  the  road  for  $18,600,000? 

But  it  is  asserted  by  the  bears  that  the  lessees  can 
not  afford  to  pay  the  rent;  that  they  will  not  continue  to 
pay  it,  or  that  they  will  wreck  the  property  through  fail- 
ure to  maintain  it.  The  lessees  have  not  failed  either  to 
pay  the  rent  or  to  maintain  the  property,  and  if  the  plans 
of  the  C.  H.  & D.  Railroad  should  be  carried  out,  that  com- 
pany would  virtually  take  the  place  of  the  lessees.  Thus 
the  city  would  be  safe.  Soon  the  deficit  would  not  only 
disappear  but  would  be  changed  into  a surplus.  This  is  the 
standpoint  from  which  our  citizens  should  look  at  the  mat- 
ter, and  is  certainly  the  true  standpoint  from  which  all  who 
have  the  interests  of  the  city  at  heart  should  view  it.  It  is 
not  the  standpoint  from  which  schemers  will  look  at  it. 
The  goose  could  not  be  successfully  plucked  that  way. 
Hence  there  are  misrepresentations,  figures  are  twisted,  and 
lies  are  magnified. 

Let  us  look  at  it  in  another  way.  Taking  the  full  cost 
of  the  road  to  the  city,  including  the  balance  of  interest 
against  us,  at  $30,000,000.  Four  per  cent,  on  this  would 
amount  to  $1,200,000,  which  is  the  figure  that  the  lease 
will  produce.  Would  any  corporation  or  syndicate  be  will- 
ing to  pay  $30,000,000  for  the  property?  Perhaps  not. 
But  should  the  city,  which  can  borrow  money  at  four  per 
cent.,  sacrifice  the  property?  Certainly  not. 

But  Cincinnati  owns  the  road.  Since  its  credit  is  good, 


14 


since  it  built  the  road,  not  with  a view  to  profit,  but  for 
the  purpose  of  extending  our  trade  into  the  South,  should 
we  now  rush  to  the  auction  block  and  have  our  financial 
interests  sacrificed?  This  is  a paramount  question. 

It  is  to  be  remarked  in  this  connection  that  the  South 
which  we  aimed  to  reach  through  the  Southern  Railroad 
was  very  different  from  the  present  South.  Then  it  was  the 
Old  South;  now  it  is  the  New  South.  Then  developments 
in  that  country  were  just  beginning.  Now  they  are  in  a 
condition  of  great  progress,  witli  a future  that  promises  ex- 
traordinary results.  Is  not  this  likely  to  enhance  the  value 
of  the  Cincinnati  Southern  Railroad?  And  is  not  this  an 
improvement  that  Cincinnati  should  hold  on  to?  Not  for  a 
money  profit,  but  for  a business  advantage.  It  should  be 
careful  not  to  permit  it  to  be  controlled  by  interests  if  not 
directly  antagonistic  to  our  city,  certainly  with  paramount 
interests  in  other  directions. 

When  the  question  of  leasing  the  Cincinnati  Southern 
Railroad  on  long  time  comes  up  for  consideration,  the  time 
for  action  will  have  been  reached;  always  provided  that  the 
lessees  shall  have  more  interest  permanently  in  Cincinnati 
than  in  any  other  direction.  We  should  risk  nothing  on 
the  patriotism  of  railroad  corporations.  With  these  it  is  not 
patriotism,  but  business.  For  the  same  reason  Cincinnati 
should  be  governed  exclusively  by  business  considerations. 

The  South  presents  to-day  a great  field  for  our  mer- 
chants and  manufacturers.  There  lies  the  raw  material; 
there  lies  also  a market  for  our  products.  Notice  the  tide 
of  emigration  to  the  South.  Notice  the  growth  of  her  cities. 
Notice  the  progress  in  agriculture.  Notice  the  development 
of  her  mineral  resources.  Notice  the  still  undeveloped 
mines.  Notice  the  fact  that  this  source  of  wealth  in  the 
South  has  so  far  been  barely  scratched.  Notice  the  pros- 
pect that  the  iron  of  the  South  at  no  distant  day  will  be 
marketed  in  London.  Take  a comprehensive  view  of  all 
these  things,  and  then  see  with  a prospective  eye  if  the 
South  is  not  to  prove  to  Cincinnati  what  the  Northwest  has 
proved  to  Chicago;  and  then,  having  made  calculations,  an- 
swer the  proposition  whether  Cincinnati  should  virtually 
give  away  this  great  trunk  line  between  Cincinnati  and  the 


15 


South,  or  suffer  our  rich  goose  to  be  plucked  by  those  who 
would  sidetrack  this  great  city.  Keep  your  eye  on  the  Cin- 
cinnati Southern  Railroad. 


From  the  Commercial-Gazette,  March  2,  1896. 
THE  SOUTHERN  RAILROAD. 


Much  has  been  said,  and  no  doubt  much  will  continue 
to  be  said,  about  the  sale  of  the  Southern  Railroad;  yet  the 
public  at  large  seem  to  be  willing  to  drift  along  and  permit 
the  proposition  to  take  its  chances.  The  effect  of  this 
seeming  indifference  is  to  encourage  agitators  or  hobby  rid- 
ers to  keep  themselves  before  the  public.  The  movement 
of  these  people  may  be  honest,  or  there  may  be  a selfish  ob- 
ject in  view,  or  it  may  be  the  result  of  spontaneous  vanity 
or  exaggerated  ideas  of  self-importance.  We  do  not  pre- 
tend to  say;  but  there  is  one  thing  that  the  tax-payers  of 
Cincinnati  should  not  forget,  and  that  is  that  the  Southern 
Railroad  property  constitutes  a big  goose,  and  a goose  is 
valuable  because  of  its  feathers.  The  plucking  party  in 
this  case  may  be  looked  for  on  the  side  of  syndicates,  or 
combinations,  or  railroad  companies,  who  would  naturally 
desire  possession  of  the  property  on  the  basis  of  a low  val- 
uation. The  first  movement  on  this  side,  with  the  pluckers 
in  the  background,  would  be  to  depreciate  the  property,  to 
talk  disparagingly  of  its  physical  condition,  to  speak  about 
the  possibility  of  parallel  lines,  to  say  that  it  cost  too  much 
to  build  it  originally,  to  say  that  it  could  be  reproduced  for 
half  of  $20,000,000,  and  so  on  for  quantity.  Yet  these 
people  pretend  to  be  speaking  in  the  interests  of  Cincinnati. 
Such  persons,  if  they  are  honest,  should  be  bored  for  the 
hollow  horn. 

Business  men  who  are  intelligent,  and  who  have  prop- 
erty for  sale,  do  not  begin  by  depreciating  it  through  adver- 
tisements or  oratorical  displays.  The  policy  in  such  cases  is 
to  exaggerate  the  value  of  the  property  that  is  for  sale,  or 
may  be  for  sale. 


16 


The  Southern  Railroad  was  built  at  a time  when  labor 
and  material  cost  much  more  than  at  present,  but  the  right 
of  way  did  not  cost  much,  and  it  was  built  for  cash.  It  is 
true  city  bonds  were  issued,  but  these  were  based  chiefly 
on  the  credit  of  the  city,  which  was  good  then,  notwith- 
standing the  flippant  remarks  and  arguments  of  the  chronic 
opponents  of  that  enterprise.  The  effect  of  the  opposition 
at  that  time  was  to  compel  the  payment  of  a higher  rate  of 
interest  on  the  city  bonds  than  was  current  at  that  time. 
Thus  $10,000  000  in  bonds  were  issued,  that  bear  7.3  in- 
terest; there  was  another  issue  at  7 percent.,  and  the  final 
issue,  when  people  came  to  their  senses  and  the  measure  of 
the  opponents  was  fairly  taken  by  capitalists,  was  placed  at 
6 per  cent.  So  we  have  a bonded  debt  of  $18,600,000, 
bearing  interest  ranging  from  6 to  7.3  per  cent,  This  is 
all  secured,  first  by  the  city,  and  second  by  a mortgage  on 
the  railroad  property.  There  is  no  other  debt  resting  on 
the  road,  and  there  is  no  stock  whatever. 

The  credit  of  the  city  is  now  such  that  these  bonds 
could  readily  be  replaced,  secured  by  the  city  and  the  road 
at  3J  per  cent,  or  less.  If  placed  even  at  4 per  cent.,  the 
net  profit  to  the  city  from  a rental  of  $1,000,000  would  be 
$260,000  per  annum,  and  no  one  doubts  that  the  railroad 
could  be  rented  on  a fifty-year  lease,  or  a perpetual  lease, 
at  $1,000,000,  with  an  addition  of  a graduated  percentage 
of  the  gross  earnings.  This  is  a plain  business  proposition, 
which  every  one  capable  of  thinking  can  readily  compre- 
hend, Yet  this  is  the  property  which  Mr.  Dexter  has  fre- 
quently said  is  a menace  to  the  credit  of  Cincinnati,  and 
which  Mr.  Perkins  has  so  often  flippantly  remarked  should 
be  sold  at  once,  inasmuch,  as  he  claims,  it  is  falling  be- 
hind physically,  and  is  likely  to  be  wrecked  by  those  who, 
manage  it. 

Preposterous  would  be  a very  mild  term  to  apply  to  so- 
called  arguments  of  this  kind.  No  one  worthy  of  serious 
attention  claims  that  the  road  is  not  in  a better  physical 
condition  than  at  any  former  time  in  its  history.  It  is  not 
long  since  Mr.  Bouscaren,  one  of  the  foremost  civil  en- 
gineers in  this  part  of  the  country,  and  a man  of  unques- 
tioned reliability,  made  a report  as  to  the  physical  condi- 


V 


17 


tion  of  the  road,  in  which  all  the  facts  were  presented  in 
detail.  This  report  also  showed  that  over  $3,000,000  had 
been  spent  on  the  road  by  the  lessees  in  arching  tunnels, 
renewing  rails  and  building  sidetracks.  All  these  perma- 
nent improvements  become  the  property  of  Cincinnati, 
while  the  equipments  are  The  security  of  the  Trustees  for 
the  fulfillment  of  their  leasing  contract,  and  this  security 
has  steadily  increased,  and  must  continue  to  increase,  in 
order  to  meet  the  requirements  of  a growing  business. 
Furthermore,  as  Mr.  Ingalls  has  shown,  the  business  of  the 
Southern  Railroad,  during  the  years  of  depression  through 
which  we  are  passing,  has  been  better  than  that  of  almost 
any  other  road  in  this  part  of  the  country.  Now,  these  are 
the  stubborn  facts  which  the  tax-payers  of  Cincinnati,  who 
own  the  road,  are  bound  to  consider,  and  these  are  the  facts 
which,  when  fairly  considered,  would  drive  to  cover  those 
agitators  who  are  seeking  to  depreciate  the  value  of  that 
property. 

And  when  we  come  to  talk  about  public  sentiment, 
what  is  it?  Where  do  we  find  its  expression?  On  Mon- 
day the  Chamber  of  Commerce,  with  a membership  of  1,600, 
held  a meeting  and  passed  a resolution  favoring  action  by 
the  Board  of  Legislation  declaring  it  necessary  to  sell  the 
property.  The  total  vote  at  the  midday  meeting  of  the 
Chamber  was  74,  and  42  favored  the  resolution,  while  32 
opposed  it,  while  quite  a number  of  the  42  did  not  favor  a 
sale  of  the  road,  but  proposed  to  have  the  matter  placed  in 
the  hands  of  the  Trustees  of  the  Sinking  Fund,  in  order  that 
offers  may  be  made,  if  there  are  any  offers  in  the  back- 
ground. This  is  called  an  expression  of  public  sentiment ; 
bear  in  mind  that,  out  of  1,600  members  of  the  Chamber  of 
Commerce,  all,  or  nearly  all,  business  men,  only  74  took 
interest  enough  to  attend  the  meeting  or  vote  on  the  ques- 
tion. 


18 


From  the  Times-Star,  March  23,  1895. 

THE  RAID  ON  THE  SOUTHERN  RAILROAD. 


For  some  time  several  public-spirited  citizens  have 
been  greatly  disturbed  about  the  safety  of  the  Cincinnati 
Southern  Railroad.  They  have  been  anxious  to  find  out  all 
about  its  condition,  to  ascertain  private  views  of  citizens 
on  the  subject  of  its  disposal,  and,  in  general,  to  stir  up 
as  much  commotion  as  possible.  This  was  apparently  done 
all  in  the  interest  of  the  city,  and  a patriotic  desire  seemed 
to  weigh  down  these  citizens  to  do  something  great  to 
protect  the  city’s  interests  in  the  road. 

At  the  same  time  they  were  publishing  to  the  world 
that  the  road  was  running  down,  the  debt  was  increasing, 
the  rent  could  not  be  paid,  that  disaster  stared  the  oper- 
ating company  in  the  face,  and,  in  a*  word,  that  the  whole 
Southern  Railroad  property  was  going  to  the  demnition 
bow-wows. 

Mr.  W.  T.  Perkins  is  the  gentleman  who  has  been 
circularizing  the  town  on  this  subject.  It  appears  that 
Col.  Woodard  has  been  employed  by  him  to  hunt  up  facts. 
Mr.  Perkins  wants  to  sell  the  road  at  once.  He  does 
not  listen  to  leasing  the  road.  Now  comes  Col.  Wood- 
ard in  an  interview  yesterday,  in  which  he  discloses  the 
fact  that  he  was  employed  not  only  by  Mr.  Perkins  but 
by  Mr.  Greenough  and  Mr.  Crawford,  his  attorney.  These 
gentlemen,  it  will  be  recollected,  belong  to  the  Southern 
Railway  company  which  recently  tried  to  push  through 
the  Alabama  legislature  a scheme  to  seize  the  Alabama 
Great  Southern  railroad,  against  the  interests  of  the  C. 
H.  & D.  people.  *Col.  Woodard  gives  the  views  of  his 
employers  of  the  Southern  railway  that  the  road  must 
be  sold  at  once,  the  mortgage  must  be  foreclosed,  and 
the  city  get  what  it  can  out  of  it.  These  views  co- 
incide in  a remarkable  degree  with  the  views  of  Mr.  Per- 
kins, who  is  another  employer  of  Col.  Woodard.  Now, 
it  is  quite  remarkable  that  this  umbilical  cord  should  exist 
between  Mr.  Perkins  and  the  Southern  railway  people — 
that  is,  Brice  & Co.,  Col.  Woodard  being  the  umbilical 
cord. 


* See  pages  8-10. 


19 


The  persistence  with  which  the  Cincinnati  Southern 
railroad  has  been  depreciated  and  attacked,  furnishes  rea- 
sonable ground  for  belief  that  there  is  a systematic  effort 
to  force  a sale  of  the  road  at  a sacrifice.  The  Southern 
railway  is  not  spending  money  in  Cincinnati  for  nothing. 
The  gentlemen  who  can  see  nothing  good  about  our  own 
Cincinnati  Southern  and  are  everlastingly  charging  depre- 
ciation of  property  and  failure  of  payment  of  rent  are  sim- 
ply expressing  what  they  hope  may  become  true.  This 
class  of  patriotic  citizens  who  are  so  zealously  laboring  in 
behalf  of  the  city  in  their  own  peculiar  way,  should  be 
looked  upon  with  suspicion.  It  is  well  known  that  the  last 
two  years  have  been  the  most  trying  in  the  history  of  rail- 
roads in  this  country.  The  Cincinnati  Southern  has  paid 
the  city’s  rental  and  has  only  borrowed  $60,000  in  that 
time.  It  would  seem  as  if  certain  people  were  becoming 
exasperated  because  the  lessee  company  has  not  actually 
defaulted  in  the  payment  of  rent. 


Cincinnati  Enquirer,  April  3rd,  1895. 

QUEEN  AND  CRESCENT. 


Alabama  Great  Southern  Injunction  Case  Will  Soon  Re 

Heard. 


(Chattanooga  Times.) 

The  contest  for  the  possession  of  the  Queen  and 
Crescent  Railway  will  be  renewed  in  the  Alabama  Courts 
this  week  when  the  Alabama  Great  Southern  Injunction 
case  will  come  up  for  a hearing  before  the  Supreme  Court. 
Cincinnati,  Hamilton  and  Dayton  directors  of  the  Alabama 
Great  Southern  were  elected  and  the  Southern  Railway 
people  enjoined  them  from  being  put  in. 

That’s  the  story  in  a nutshell,  but  in  order  that  the  liti- 
gation may  be  thoroughly  understood,  a little  history  of  the 
legal  phase  of  the  interesting  question  is  necessary. 


20 


The  Alabama  Great  Southern  Railroad  was  built  quite 
a number  of  years  ago,  it  is  claimed,  by  “Carpet-Baggers,” 
the  State  of  Alabama  guaranteeing  $3,000,000  in  bonds,  and 
the  road  was  built,  but  it  became  necessary  for  the  State  to 
seize  the  road,  and  a receiver  was  the  outcome.  But  ultimate- 
ly the  sale  of  the  property  was  effected  to  a foreign  syndi- 
cate. The  State  then  repudiated  the  bonds,  but  kept  the  mon- 
ey it  received.  The  bonds  of  the  old  Alabama  and  Chatta- 
nooga Company, which  was  the  original  of  the  Alabama  Great 
Southern  Road,  are  something  of  history.  The  bonds  that 
went  abroad  were  purchased  by  the  Erlangers,  and  here  is 
where  the  renowned  financier,  Baron  Erlanger  figures.  Af- 
ter several  years  of  litigation  the  railroad  property  was 
sold  under  a decree  of  foreclosure  issued  by  the  Circuit 
Court  of  the  United  States  and  was  purchased  by  the  bond- 
holders— that  is  the  Erlanger  syndicate. 

In  1887,  under  the  general  corporation  law,  then  in 
force,  the  purchasers  organized  the  Alabama  Great  Sou- 
thern Railway  Company.  The  owners  being  entirely  non- 
resident and  citizens  of  Great  Britian,  for  the  purpose  of 
convenient  management,  organized  under  the  “companies 
acts”  the  Alabama  Great  Southern  Railway  Company,  lim- 
ited, of  London,  and  the  whole  of  the  capital  stock  of  the 
Alabama  Great  Southern  Railroad  Company  or  Alabama 
corporation,  was  transferred  to  the  English  company,  which 
from  its  inception  to  the  present  time,  has  controlled  the 
election  of  Directors  of  the  Alabama  corporation  by  reason 
of  its  ownership  of  all  the  capital  stock.  When  the  East 
Tennessee,  Virginia  and  Georgia  Railroad  Company  desir- 
ed to  secure  control  of  this  and  other  railroads  connected 
with  it,  which  form  what  isv  commonly  called  the  Queen 
and  Crescent  route,  embracing  the  Cincinnati  Southern, 
the  Alabama  Great  Southern  and  the  Northeastern  Railroad, 
and  running  from  Cincinnati  to  the  city  of  New  Orleans, 
something  had  to  be  done. 

To  accomplish  the  result,  the  East  Tennessee,  Virginia 
and  Georgia  people  bought  a majority  of  the  shares  of  the 
English  syndicate,  and  in  order  to  pay  for  them 
issued  $6,000,000  of  these  bonds  jointly  with  the  Rich- 
mond and  Danville  Railroad  Company.  These  bonds  are 


2 L 


known  as  the  Cincinnati  extension  bonds,  and  in  order  to 
secure  the  payment  of  these  bonds  a majority  of  the  capital 
stock  of  the  English  company  was  conveyed  by  deed  of 
trust  to  the  Central  Trust  Company  of  New  York,  and  this 
majority  of  stock  now  stands  recorded  on  the  books  of  the 
English  Company  in  the  name  of  the  Central  Trust  Com- 
pany. Default  was  made  iu  the  payment  of  the  interest 
and  proceedings  were  begun  in  the -Circuit  Court  of  the 
United  States,  at  Knoxville,  Tenn.  to  foreclose  this  deed 
of  trust. 

Before  this  time  Henry  A.  Taylor  and  his  associates, 
who  controlled  the  Cincinnati,  Hamilton  and  Dayton  Rail- 
road, purchased  a majority  in  value  of  these  bonds  and 
were  made  parties  to  the  litigation,  in  regard  to  the  fore- 
closure of  the  deed  of  trust,  and  are  nowT  undertaking  to 
resist  this  foreclosure,  but  a decree  was  made  in  the  fore- 
closure suit.  On  October  3,  1894,  which  was  the  day  fix- 
ed for  the  annual  meeting  of  the  stockholders  of  the  Ala- 
bama Great  Southern,  a stockholders  meeting  was  held  in 
Birmingham,  Ala,  All  of  the  stockholders  were  present, 
the  English  company  being  represented  by  proxy.  An 
election  was  held  for  Directors,  and  after  the  vote  had 
been  cast,  but  before  the  result  had  been  announced,  the 
telleis  were  served  with  an  injunction  by  a United  States 
Marshal. 

John  B.  Greenough,  who  claimed  to  be  a stockholder, 
sued  out  the  injunction.  It  is  a fact  that  Mr.  Taylor 
and  his  associates  received  all  the  votes  of  the 
association  except  13,  out  of  a total  vote  of  156,600. 
The  restraining  order  preventing  the  announcement 
of  the  result  was  issued  by  Judge  Bruce.  On  the 
8th  of  last  November  a bill  similar  in  terms  was  filed 
in  the  Court  of  Birmingham  by  John  Greenough,  Calvin 
Brice  and  Thomas,  asking  an  injunction  similar  to  that 
which  had  been  granted  by  Judge  Bruce.  The  injunction 
was  issued  by  Judge  Wilkerson,  and  a motion  was,  there- 
fore made  by  the  defendants  to  dissolve  the  injunction.  It 
was  heard  before  the  Judge  on  November  20,  and  he  dis- 
solved it,  holding  that  the  bill  was  wholly  wanting  in 
equity.  He  delivered  an  opinion  on  the  first  day  of  De- 


22 


cember,  and  on  the  game  day  the  applicants  appealed  to 
the  Supreme  Court  of  Alabama  and  reinstated  the  injunct- 
ion by  bond.  The  case  was  brought  to  the  Supreme  Court, 
which  held  that  it  stood  for  trial  on  the  7th  day  of  Decem- 
ber, but  the  case  was  postponed  until  the  April  term. 


Cincinnati  Enquirer,  April  4,  1895. 

POINTED. 


I he  Committee’s  Report 

To  the  Fi  eight  Bureau  on  the  Sale  of  the  Southern. 


They  Advise  Against  It  and  Give  Reasons  For  The  Stand 
Taken  By  Them. 


At  the  time  of  the  general  agitation  that  was  carried 
on  in  the  city  recently  concerning  the  advisability  of  the 
sale  of  the  Cincinnati  Southern  Railway,  the  Executive 
Committee  of  the  Freight  Bureau  appointed  from  its  mem- 
bership a sub-committee,  the  duties  of  which  were  to  ex- 
amine into  the  existing  conditions  and  to  ascertain  what 
grounds  there  might  be  for  the  advocacy  of  the  sale  of  the 
road,  if  any,  or  what  reasons  there  might  appear  for  retain- 
ing the  road  as  the  property  of  the  city. 

This  committee  consisted  of  James  J.  Hooker, E.  C. 
Goshorn,  Earl  W.  Stimson  and  Thomas  Morrison.  The 
ground  was  carefully  gone  over,  not  only  in  connection  with 
the  alleged  advisability  of  courting  the  Cincinnati,  Hamilton 
and  Dayton  Railway  and  the  Southern  Railway  Company 
as  bidders,  but  also  the  financial  condition  of  the  Cincin- 
nati, New  Orleans  and  Texas  Pacific  Company,  the  present 
lessee  of  the  Cincinnati  Southern.  The  committee  at  a 
meeting  of  the  Executive  Committee  of  the  Freight  Bur- 
eau, held  yesterday  afternoon,  presented  its  report,  which 
was  adopted. 


23 


The  report  is  as  follows : 

Cincinnati,  March  26,  1895, 

Thomas  Morrison,  President  Cincinnati  Freight  Bur- 
eau, City — Dear  Sir:  Your  committee  to  whom  was  re- 
ferred the  matter  of  considering  the  present  agitation 
through  the  press  for  the  disposal  of  the  Southern  Road, 
begs  leave  to  submit  the  following : 

There  is  nothing  in  the  action  of  the  present  lessees 
to  justify  the  statements  as  to  their  defaulting  upon  the 
lease.  Much  stress  has  been  laid  upon  the  fact  that  the 
road  is  in  the  hands  of  a receiver. 

Among  those  who  are  well  informed  the  reason  for  the 
receivership  is  known  to  be  for  a cause  entirely  outside  of  the 
financial  condition  of  the  operating  company.  The  property 
is  in  the  hands  of  the  lessee  for  the  next  11  years,  and, 
admitting  the  power  of  the  city  to  sell  the  road,  it  would 
have  to  be  sold  subject  to  this  lease. 

At  the  present  time  the  earning  power  of  the  railroad 
property  is  controlled  by  the  same  conditions  that  impair 
the  value  of  all  industrial  enterprises.  What  manufacturer 
would  be  willing  to  sell  his  plant  based  upon  its  earnings 
for  the  last  two  years?  Why  should  this  time,  the  very 
worst  period  that  has  occured  for  the  last  15  years,  be  se- 
lected for  the  sale  of  this  valuable  property?  Why  agi- 
tate for  the  sale  before  the  appearance  of  a probable  buy- 
er? It  is  no  reflection  on  the  management  of  the  road 
that  its  earnings  have  declined.  Its  showing  in  this  re- 
gard is  quite  as  good  as  that  of  its  competitors  south  of 
the  Ohio  River,  and  compares  favorably  with  any  or  all 
lines  north  of  it. 

The  merchants,  manufacturers  and  taxpayers  of  Cin- 
cinnati have  a direct  interest  in  the  Cincinnati  Southern 
Railway,  and  the  present  management  should  have  the  sub- 
stantial support  of  all  citizens.  A failure  on  the  part  of 
present  operating  company  to  pay  its  rental  would  be  a re- 
flection upon  the  business  interests  of  Cincinnati.  If  the 
road  receives  the  support  that  can  be  given  it  there  need 
be  no  fears  of  such  a result. 

An  investigation  by  your  committee  develops  the  fact 
that  when  the  lease  was  made  it  was  estimated  that  twenty 


24 


miles  of  side  track  would  meet  the  requirements  of  the 
lease.  The  lessees  have  laid  76.56  miles  in  order  to 
meet  the  requirement  of  commerce.  The  same  general 
facts  apply  to  renewals  of  rails,  arching  of  tunnels  and 
strengthening  of  bridges.  In  order  to  keep  up  with  mod- 
ern standards  the  expenditures  by  the  lessees  in  this  behalf 
have  largely  exceeded  the  original  estimates  of  the  Trus- 
tees’ Engineer,  reaching  in  the  aggregate  $2,202,477,07. 

That  the  property  is  being  judiciously  handled,  is  evi- 
denced by  the  fact  that,  although  the  gross  earnings  for 
the  last  fiscal  year  were  $597,990,24  less  than  those  of  the 
preceding  year,  the  net  earnings  show  a shrinkage  of  only 
$86,951,04.  Your  committee  is  assured  that  this  result 
was  obtained  without  allowing  the  condition  of  the  prop- 
erty to  depreciate.  Your  committee  has  every  assurance 
that  the  service  rendered  the  public  and  condition  of 
equipment  are  fully  up  to  the  standard  of  a first-class  car- 
rier of  both  freight  and  passengers. 

In  conclusion,  the  committee  cannot  but  be  impressed 
with  the  fact  that  the  agitation  of  this  subject  at  this  time 
will  promote  the  interests  of  those  who  wish  to  depreciate 
the  value  of  the  property — without  effecting  any  result  of 
practical  value  to  the  city.  Respectfully  submitted. 

James  J.  Hooker,  E.  C.  Goshorn, 

Earl  W.  Stimson,  Thomas  Morrison, 

Committee. 


From  the  Commercial  Gazette,  April  15,  1895. 

THE  SOUTHERN  RAILROAD. 


The  remarks  of  Mr.  Ingalls  at  the  meeting  of  the 
Young  Men’s  Business  Club,  on  Saturday  evening,  should 
put  an  end  to  the  talk  about  selling  the  Southern  Rail- 
road. Mr.  Ingalls  presented  his  views  from  a practical 
standpoint  ; he  is  a practical  man  ; while  those  who  favor 
the  sale  of  the  road  talk  largely  without  knowledge. 

In  the  first  place,  no  party  has  come  to  the  front  with 
a proposition  to  purchase  the  road;  there  is  no  market  for 


it  at  any  reasonable  price ; this,  therefore,  is  not  the  time 
to  agitate  the  subject.  No  man  in  his  senses  would  sell 
railroad  property,  or  try  to  sell  it,  in  these  days  of  extreme 
depression,  unless  forced  to.  Fortunately  Cincinnati  is 
not  forced  to  sacrifice  this  great  property.' 

A party  who  has  property  to  sell  does  not  usually  de- 
preciate it  in  advance,  yet  this  is  precisely  what  Mr.  Perkins 
and  some  others  have  been  doing  for  several  months.  The 
falling  off  in  earnings  has  been  used  to  scare  citizens  who 
do  not  take  more  than  a superficial  view  of  matters.  But 
it  happens  that  while  the  Southern  road  has  suffered:  in 
earnings,  it  has  come  out  better  than  most  other  lines,  and 
Mr.  Ingalls  shows  that  when  business  returns  to  its  normal 
condition,  which  it  surely  will,  recent  deficiences  will  be 
more  than  made  up. 

The  lessees  have  put  into  the  road  over  two  million 
dollars  in  the  shape  of  permanent  improvements;  this  is 
over  one-tenth  of  the  original  cost;  the  rent  is  being  paid, 
and  it  will  continue  to  be  paid;  furthermore,  there  is  rea- 
sonably good  security  for  it.  Why,  then,  should  Cincin- 
nati listen  to  wild  talk  about  selling  the  road?  It  is  true 
the  rental  is  not  sufficient  to  pay  the  interest  on  $18,800,- 
000  in  bonds,  but  this  is  because  the  bonds  bear  the  ex- 
traordinary interest  of  seven  and  three-tenths,  seven,  and 
a small  proportion  of  them  six  per  cent.  These,  if  obtain- 
able, could  now  be  funded  at  less  than  four  per  cent. 
Then  the  rent  would  show  a surplus  of  over  $400,000  per 
annum.  Cincinnati  would  then  be  right  in  the  road  toward 
the  realization  of  all  that  it  has  invested  in  that  property, 
and  this  would  be  a great  deal  more  than  was  originally 
expected.  The  time  was  when  people  in  this  city  were 
willing  to  donate  $10,000,000  to  any  corporation  that 
would  agree  to  build  a road  between  Cincinnati  and  Chatta- 
nooga. It  looks  now  as  if  the  city  would  get  back  all  its 
money,  and  at  the  same  time  realize  all  the  trade  advant- 
ages and  a great  deal  more  in  that  line  than  was  antici- 
pated. 

In  seven  years  from  now  the  seven  and  three-tenths 
bonds  will  mature;  within  thirteen  years  from  now  all  the 
bonds  will  mature;  from  that  time  forward  there  will  be 


26 


i ' ' 

• / ■ ' I 

I 

clear  sailing,  and  Cincinnati,  instead  of  paying  out  money 
annually,  will  realize  a profit  of  §400,000  per  annum. 
That  bonded  debt,  therefore,  of  §18,800,000  will  not  count, 
for  the  reason  that  it  will  more  than  take  care  of  itself. 
Thereafter  taxes  may  be  reduced,  and  this  municipality 
will  virtually  have  no  bonded  debt  of  consequence. 

Keep  your  eye  on  the  Southern  Railroad,  and  at  the 
same  time  keep  your  eye  on  the  South.  This  city  is  now 
beginning  to  realize  the  importance  of  this  great  railroad 
line,  which  brings  us  into  direct  connection  with  the  New 
South  and  the  growing  South. 


From  the  Cincinnati  Enquirer. 

SENATOR  BRICE  SPEAKS. 


He  and  Mr.  Spencer  Confirm  the  Big  Railroad  Deal. 


The  Enquirer  has  on  more  than  one  occasion  of  late 
insisted  that  the  Southern  Railway  Company  would  finally 
obtain  control  of  the  Cincinnati  Southern  Road.  It  is 
known  that  an  offer  allowing  $1,000,000  profit  was 
made  to  the  C.  H.  and  D.  people  for  their  interest 
in  the  Cincinnati  extension  bonds,  but  this  offer  was 
refused , and  the  Enquirer  said  then  that  the  C.,  H.  and  D. 
people  would  eventually  sell  and  that  they  were  only  hold, 
ing  off  for  a better  price.  The  result  proves  the  correctness 
ot  these  predictions.  The  C.,  H.  and  D.  party  has  sold  all  of 
holdings  to  the  Southern  Railway  Company,  and  has  been 
able  to  compel  that  corporation  to  grant  it  an  equal  inter- 
est in  the  C.,  N.  O.  and  T.  P.,  in  addition  to  the  price  it 
received  for  the  bonds. 

The  first  intimation  of  the  transaction  received  in 
Cincinnati  came  yesterday  in  the  form  of  the  following 
telegram  from  Hon.  Calvin  S.  Brice  to  the  Enquirer  : 

“Washington,  D.  C.,  May  3,  1895. 
u You  may  say  that  the  Cincinnati  Southern  and  Ala- 
bama Great  Southern  properties  were  to-day  transferred 


27 


from  the  C.,  H.  and  D.  to  the  Southern  Railroad  Company, 
of  which  General  Samuel  Thomas  is  one  of  the  leading  di- 
rectors. - CALVIN  S.  BRICE. 

Upon  receipt  of  this  dispatch  the  Enquirer  wired  Mr. 
Samuel  Spencer  in  New  York,  asking  him  to  make  an 
official  statement  of  the  transaction,  and  received  the  fol- 
lowing reply : 

To  the  Editor  of  the  Enquirer: 

New  York,  May  3,  1895. 

It  is  true  that  the  Southern  Railway  Company  and 
the  C.,  H.  and  D.  have  settled  their  differences,  grow- 
ing out  of  the  Cincinnati  extension  bonds,  and  to  the  satis- 
faction of  both  parties.  The  settlement  provides  that  the 
control  of  the  Alabama  Great  Southern  goes  to  the  South- 
ern Railway,  and  the  representatives  of  that  company  to 
the  extent  of  a majority  have  to-day  been  elected  members 
of  the  board. 

As  regards  the  C.,  N.  0.  ard  T.  P.  a majority  of  the 
stock  in  that  company  is  to  be  put  into  the  hands  of  a 
trustee  for  the  joint  and  equal  benefit  of  the  C.,  H.  and  D. 
and  the  Southern  Railway.  The  effect  of  this  is  that  the 
Southern  Railway  will  control  the  Alabama  Great  Southern 
the  C.,  H.  and  D.  having  no  interest  therein,  and  that  the 
line  between  Cincinnati  and  Chattanooga  shall  be  a neutral 
line,  the  control  being  owned  and  exercised  equally  by  the 
C.,  H.  and  D.  and  the  Southern  Railway  combined.  This 
line  between  Cincinnati  and  Chattanooga  is  to  be  operated 
primarily  in  its  own  interest,  and  it  will  be  open  to  ex- 
change traffic  wfith  all  lines  at  Cincinnati  and  at  Chatta- 
nooga. 

Of  course  there  can  be  no  change  in  the  C , N.  0.  and 
T.  P.  at  present,  as  that  property  is  in  the  hands  of  a Re- 
ceiver and  must  continue  so  until  it  can  be  properly  reor- 
ganized. 

The  immediate  effect  of  the  settlement,  however,  will 
be  beneficial  in  that  it  stops  all  litigation  and  contests 
over  the  control  of  the  properties,  and  the  C.,  H.  and  D. 
and  the  Southern  Railway  instead  of  being  antagonistic 
will  in  the  future  be  co-operative. 

SAMUEL  SPENCER. 


28 


President  M.  D.  Woodford  said  last  night  to  an  En- 
quirer representative  in  New  York: 

“ As  affairs  were  going  all  interests  were  being  hurt, 
and  the  transfer  to-day  makes  everything  bright,  where  be- 
fore it  was  stormy.  You  know  of  the  legal  battles  that 
were  being  waged.  I said  in  a former  interview : ‘ If 

we  ever  do  sell  our  holdings  it  will  be  under  conditions  that 
will  be  a creditable  business  transaction,  creditable  to  us 
as  business  men,  and  beneficial  to  Cincinnati,  for  Cincin- 
nati’s interests  are  our  interests.’  That  time  arrived  to- 
day and  we  have,  I think,  lived  up  to  what  I said  then. 
The  Executive  Committee  of  the  Cincinnati,  Hamilton  and 
Dayton  Road  also  met  to-day  and  authorized  me  to  sign  a 
traffic  contract  with  the  Southern.  It  is  a peculiar  con- 
tract, because  under  its  terms  we  can  not  do  each  other  any 
harm,  and  each  road  will  get  every  pound  of  freight  and 
every  passenger  that  it  is  justly  entitled  to.  I said  ‘pecu- 
liar’ for  the  reason  that  each  road  apparently  has  the  best 
of  it. 

Mr.  S.  M.  Felton,  Receiver  of  the  Cincinnati,  New  Or- 
leans and  Texas  Pacific  Railway,  President  of  the 
Alabama  Great  Southern  and  General  Manager  of  the 
Queen  and  Crescent  System,  declared  himself  pleased  when 
seen  last  night  at  the  Netherland  Hotel,  in  New  York,  by 
a reporter. 

“ I am  glad  the  matter  in  question  is  settled  and  out 
the  way,”  Mr.  Felton  said.  “ I think  it  an  excellent 
ihing  for  the  various  properties  involved,  and  particularly 
for  the  city  of  Cincinnati.” 


29 


From  the  Cincinnati  Enquirer,  May  5,  1895. 

PLEASED  ARE  THE  QUEEN  CITY  MEN. 


That  Cincinnati  at  Last  Has  a Clear  Track  to  the  Indus- 
tries of  Her  Busy  Southern  Neighbors — Presidents 
Spencer  and  Woodford  Size  up  the  Situation — A 
Review  of  the  Deal,  Showing  What  It  Constitutes 
and  Its  Advantages. 

Cincinnati  Southern  affairs  and  the  final  settlement  of 
the  great  questions  involved  in  the  operation  of  this  prop- 
erty, furnished  a fruitful  theme  for  conversation  yester- 
day among  business  men  and  railway  officials.  The- 
parties  who  have  personal  and  financial  interests  at 
stake  in  the  great  compromise  have  not  yet  divulged  the 
exact  details  of  the  transaction.  It  is  a peculiar  one  at 
best,  and,  perhaps,  there  has;  never  before  been  a case  when 
two  independent  railroad  companies  agreed  to  assume  joint 
and  equal  control  in  the  leasehold  of  a third  railroad  com- 
pany. The  Executive  Committee  of  the  C.,  H.  and  D.  is 
known  to  have  held  a meeting  yesterday  afternoon  in  New 
York,  at  which  President  Woodford  was  authorized  to  sign 
a traffic  agreement  with  the  Southern  Railroad  Company’s 
Directors  to  the  effect  that  neither  road  shall  enter  into 
any  other  deal  that  is  antagonistic  to  the  other’s  interest, 
but  that  they  shall  work  in  harmony.  This  was  a necessary 
sequence  to  the  transaction,  and  the  details  of  the  traffic 
agreement}  will  be  awaited  with  interest. 

Everyone  realizes  that  the  Cincinnati,  Hamilton  and 
Dayton  Railway  Company  is  operated  in  the  interests  of 
Cincinnati’s  trade.  The  line  has  its  headquarters  here, 
and  its  tracks  traverse  territory  directly  tributary  to  this 
city.  It  is  distinctively  a Cincinnati  road,  and  Cincinnati’s 
interests  are  its  interests.  From  Cincinnati  it  draws  its 
largest  revenue,  and  it  is  therefore,  fair  to  assume  that  its 
policy  and  interests  in  connection  with  the  Cincinnati 
Southern  will  be  all  in  the  direction  of  operating  the  prop- 
erty in  its  own  interest  and  in  the  interest  of  Cincinnati, 
which  are  identical. 


30 


It  is  a particularly  good  thing,  too,  for  the  C.,  H.  and 
D.  that  it  has  been  able  to  make  an  alliance  with  the 
Southern  Railway  Company,  which  gives  it  an  outlet  via 
New  Orleans  and  the  Eastern  cities.  The  B.  and  0.  S.  W. 
reaches  tidewater  over  the  Baltimore  and  Ohio.  The  Penn- 
sylvania has  its  own  line  East,  and  also  works  through  al- 
liance with  the  Louisville  and  Nashville. 

BOTTLED  UP. 

Failing  to  make  an  alliance  with  the  Queen  and  Cres- 
cent system  meant  to  the  C.,  H.  and  D.  that  it  would  be 
bottled  up  at  Cincinnati  and  unable  to  get  business  through 
other  lines.  Friendly  feeders  are  a most  important  factor 
in  the  problem  of  modern  transportation,  and  as  the  Queen 
an  Crescent  system  was  the  only  available,  outlet  left  for 
the  C.,  H.  and  D.  at  Cincinnati,  it  is  easy  to  comprehend 
the  motives  back  of  the  C.  H.  and  D.  party  in  making  a 
vigorous  fight  for  control  of  that  property.  If  the  Southern 
Railroad  Company  should  for  reasons  of  its  own  attempt  to 
divert  traffic  from  Cincinnati  it  is  therefore  fair  to  assume 
that  the  C.,  H and  D.  people,  having  equal  and  joint  con- 
trol of  the  Cincinnati  Southern,  would  make  a demand  on 
its  own  account  for  all  business  to  which  it  is  entitled. 

There  is,  however,  no  apparent  reason  to  suppose  that 
the  Southern  Railway  Company  would  or  could  divert  the 
traffic  of  the  Cincinnati  Southern,  either  to  Louisville  or 
to  the  East,  because  the  character  of  the  business  handled 
would  not  permit  it.  That  road  carries  South  the  manu 
fadured  products  and  grain  and  provisions  of  the  West  and 
North,  and  it  carries  North  the  iron  of  Alabama  and  Ten- 
nessee and  the  fruits  of  Florida,  and  in  both  directions  the 
the  large  passenger  traffic  to  and  from  the  health  resorts, 
flow  could  traffic  of  this  kind  be  diverted  to  the  East  ? 
There  is  no  danger  to  be  feared  of  diversion  of  freight  to 
Louisville,  for  although  Samuel  Thomas  is  President  of 
the  Monon,  which  reaches  Louisville,  and  he  is  also  largely 
interested  in  the  Southern  Railway  Company,  it  is  well 
known  that  the  Monon’s  interests  and  arrangements  are  all 
with  the  Louisville  and  Nashville  Company. 


81 


FROM  NEW  YORK. 


Explanation  and  Comment  by  Presidents  Spencer 
and  Woodford. 


Special  Dispatch  to  the  Enquirer. 

New  York,  May  4. 

Although  the  Satnrday  half  holidays  are  closely  ob- 
served by  Wall  Street  men  and  others  in  the  financial  dis- 
trict, Presidents  Woodford  and  Spencer  and  Henry  A.  Tay- 
lor were  busy  all  the  afternoon  in  the  Union  Trust  Com- 
pany Building  adjusting  some  of  the  details  connected  with 
yesterday’s  gigantic  transfer. 

President  Woodford  said  after  the  meeting : 

“ There  is  very  little  to  add  to-day.  We  protected 
the  Cincinnati,  Hamilton  and  Dayton  interests,  and  in 
doing  so  protected  the  interests  of  Cincinnati,  because  their 
interests  are  identical.  It  is  the  best  thing  that  could  have 
happened,  for  it  brings  a new  feeder  to  Cincinnati,  whereas 
before  we  joined  forces  we  were  taking  traffic  to  Meridian, 
and  from  there  on  it  was  a constant  battle  with  antagon- 
istic lines.  We  now  help  them  and  they  help  us.  Mr 
Henry  A.  Taylor  leaves  for  Europe  shortly.  There  are 
large  English  interests  to  be  made  acquainted  with  the  de- 
tails of  the  transfer.” 

President  Samuel  Spencer  said;  “The  Southern  Rail- 
way will  now  rest  where  it  is.  We  have  now  reached  our 
Northern  geographical  boundary,  and  will  not  go  beyond  it. 
All  territory  south  of  the  Ohio  River,  or  that  old  imaginary 
Mason  and  Dixon  line,  should  naturally  belong  to  Southern 
railway  systems.  When  Cincinnati  built  its  road,  it  crossed 
the  border  into  our  country.  The  purpose,  of  course,  was 
to  gather  from  the  ramifications  our  people  and  our  freight, 
and  bring  them  finally  over  this  one  road  to  Cincinnati, 
which  was  to  be  benefitted  financially,  commercially  and 
every  other  way  by  the  enterprise,  and,  with  this  end  in 
view,  the  project  was  carried  out.  Well,  now  suppose  we 
had  crossed  your  line  and  gone  digging  up  into  Ohio  and 
Indiana  and  Michigan.  Don’t  you  suppose  we  would 
eventually  have  encountered  opposition?  Of  course  we 


32 


would,  and  you  would  have  eventually  effected  an  arrange- 
ment of  the  kind  that  was  concluded  here  yesterday,  by 
which  we  have  both  benefitted.  In  brief,  it  has  made  Cin- 
cinnati the  northern  and  western  terminus  for  the  Southern 
system,  which  now  embraces  a round  5,000  miles.  We 
will  send  our  business  there  now  cheerfully,  whereas,  prior 
to  this  time  we  did  our  best  to  divert  it. 


From  the  Commercial  Gazette,  May  15,  1895. 

CINCINNATI  SOUTHERN  RAILROAD. 


To  the  Editor  of  the  Commercial  Gazette : 

The  construction  of  a line  of  railway  by  a municipal- 
ity is  an  experiment  very  rarely  tried.  It  is  at  once  a 
hazardous  and  a doubtful  undertaking,  requiring  business 
sagacity  and  judgment  of  the  highest  order.  There  are 
times,  however,  when  conditions  render  it  imperative  that 
much  should  be  placed  at  stake  in  order  that  an  object  may 
be  gained  which,  if  lost,  would  entail  the  loss  of  reputa- 
tion and  fortune.  This  is  the  condition  in  which  the  City 
of  Cincinnati  found  herself  immediately  after  the  close  of 
the  civil  war. 

Louisville  was  rapidly  gaining  the  supremacy  in  com* 
mercial  transactions  throughout  the  South,  by  reason  of 
her  facilities  for  quick  transportation  of  her  products. 
The  Louisville  and  Nashville  Railroad,  built  principally 
through  the  influence  and  with  the  means  of  Louisville 
business  men,  was  opened  for  traffic  in  November,  1859, 
between  Louisville  and  Nashville.  Cincinnati  was  only 
enabled  to  reach  the  same  territory  as  that  reached  by 
Louisville  by  a long  and  tedious  river  transit  to  Louisville, 
thence  via  Louisville’s  railway  to  the  South.  This  decided 
advantage  enjoyed  by  Louisville  over  Cincinnati  soon  im- 
pressed the  people  of  the  Queen  City  with  the  imperative 
necessity  of  establishing  a line  of  communication  with  the 
South  as  direct  at  least  as  was  furnished  by  the  Louisville 
and  Nashville  Railroad  to  Louisville  commerce.  It  re- 
quired longer  to  transport  goods  from  Cincinnati  to  Louis- 


33 


ville  than  from  Louisville  to  the  destination  of  goods  in 
the  South.  It  was,  therefore,  not  strange  that  the  busi- 
ness of  Louisville  grew  enormously  at  the  expense  of  Cin- 
cinnati. 

E.  A.  Ferguson,  whose  name  will  ever  be  synonymous 
with  the  Cincinnati  Southern  Railway,  and  to  whose  un- 
tiring industry  and  talent  is  due  the  credit  that  Cincinnati 
saved  her  reputation  in  the  commercial  world  and  is  pos- 
sessed of  a property  increasing  in  value  each  year,  was 
the  leader.  Mr.  Ferguson  unselfishly  devoted  the  best 
years  of  his  younger  life  to  this  project,  and  only  after  re- 
peated trials,  which  frequently  seemed  hopeless,  did  suc- 
cess crown  his  efforts.  Cincinnati  will  never  be  able  to 
sufficiently  compensate  Mr.  Fergus  mi  for  the  service  which 
he  rendered  her,  and  although  the  wisdom  of  the  construc- 
tion of  the  railway  by  the  city  has  often  been  questioned, 
and  indeed  it  is  even  now  being  doubted  and  its  sale,  ad- 
vocated by  some  of  the  men  who  have  been  most  benefited, 
a careful  investigation  of  the  entire  question  is  convinc- 
ing beyond  reasonable  doubt  that  it  is  one  of  the  best  in- 
vestments ever  made  with  the  money  of  a municipality, 
and  the  longer  it  is  held  by  the  city  the  more  unjustifiable 
will  be  the  sale  of  it. 

It  is  needless  to  repeat  the  story  of  the  early  struggle 
of  the  project,  which  is  fresh  in  the  minds  of  most  of  our 
business  men  of  today.  The  Board  of  Trustees  appointed 
by  the  Superior  Court  to  construct  the  railway  were  men 
well  fitted  to  discharge  the  duties  devolving  upon  them.  Mr. 
Ferguson  was  aptly  chosen  as  the  leader.  It  is  also  un- 
necessary to  point  out  the  mistakes  which  were  made  by 
the  Trustees.  They  made  them,  as  any  body  of  men 
chosen  to  perform  a like  task  would  have  done,  and  the 
most  remarkable  thing  is  that  they  were  few,  considering 
the  enormity  of  their  undertaking.  Railway  construction, 
especially  the  financiering  thereof,  had  not  reached  that, 
perfection  which  it  occupies  today.  But  in  the  light  of 
their  knowledge  and  experience,  “ they  builded  wiser  than 
they  knew.” 

Present-day  financiering  would  have  dictated  the  pol- 
icy of  issuing  redeemable  bonds,  or  longer  termed  bonds 


34 


with  a lower  rate  of  interest.  It  would  have  been  possi- 
ble, long  ago,  to  refund  the  bonds  at  a uniform  rate  of 
interest,  not  to  exceed  four  per  cent.  The  financial  con- 
ditions, however,  prevailing  at  the  time  the  bonds  were 
issued  regulated,  to  a great  extent,  the  action  of  the 
Trustees,  and  the  limitations  under  which  they  were 
obliged  to  act,  in  conformity  with  the  special  act  of  legisla- 
tion enacted  for  the  purpose  of  constructing  the  railway, 
were  responsible  for  the  conditions  under  which  the  loans 
were  negotiated.  It  was  not  the  fault  of  the  Trustees, 
but  of  improper  legislation,  that  caused  this  defect  in  the 
most  important  element  of  the  life  of  the  project. 

The  refunding  of  the  indebtedness  at  a uniform  rate 
of  four  per  cent  would  save  the  people  of  Cincinnati  about 
§670,000  per  annum.  In  1902  the  $10,000,000  issue  of 
bonds  matures.  If  this  issue  is  refunded  at  four  per  cent, 
which  now  bears  seven  and  three-tenths  per  cent  (a  small 
portion  seven  per  cent),  it  will  effect  a saving  of  $330,000 
annually  in  the  interest  charge.  If,  however,  the  sinking 
fund,  which  will  have  accumulated  at  that  time,  be  applied 
to  the  reduction  of  the  indebtedness,  amounting  to  about 
$3,275,000,  and  the  new  loan  of  $6,725,000  be  placed  in 
lieu  of  the  original  $10,000,000  issue  at  a rate  of  four  per 
cent,  a saving  of  over  $450,000  per  annum  will  be  enjoyed 
by  the  people  of  Cincinnati.  This  is  in  excess  of  the 
present  levy  for  the  Cincinnati  Southern  interest  fund  and 
sinking  fund  combined. 

If  the  financial  policy  indicated  above  were  carried 
into  effect  it  would  fix  the  annual  interest  charge  after 
1902  on  the  entire  indebtedness  at  only  $800,000,  against 
the  present  $1,275,000,  or  a saving  of  nearly  a half  million 
dollars  per  annnm.  In  1901  the  annual  rental  from  the 
lessee  will  be  $1,250,000,  which  will  leave  the  city  a sur- 
plus of  $450,000.  The  present  deficit  is  about  $250,000, 
which  is  raised  by  a tax  levy  of  1 445-1,000  mills  on  the 
city  valuation  of  property. 

In  1906  the  six-million  issue  of  bonds  matures.  By 
refunding  this  issue  at  not  to  exceed  four  per  cent  per 
annum  interest,  the  interest  charge  may  be  further  re- 
duced about  $180,000  per  annum.  September  3,  1906 


35 


the  present  lease  expires.  No  difficulty  will  be  found  at 
that  time  to  re-lease  the  property  at  the  same  rental  as 
that  last  paid  by  the  present  lessee  upon  a long-term 
lease,  to  enable  the  lessee  company  to  justifiably  improve 
the  property.  After  1906,  therefore,  the  city  will  enjoy 
an  annual  surplus  of  about  $630,000. 

In  1909  the  last  of  the  construction  bonds  mature. 
The  surplus  revenue  derived  from  the  time  the  rental  ex- 
ceeded the  interest  charge  and  the  sinking  fund,  applied 
to  the  reduction  of  the  indebtedness,  the  entire  indebted- 
ness at  this  time  should  not  exceed  $8,000,000,  or  a re- 
duction of  about  $10,000,000  in  the  original  loan.  Thus 
the  annual  interest  charge  will  not  exceed  $315,000, 
netting  the  city  a surplus  of  $935,000  annually.  This  is 
nearly  forty  per  cent  of  the  total  tax  levied  in  the  year 
1894. 

It  is  obvious,  therefore,  that  the  property  will  be  self- 
sustaining  after  the  year  1901,  only  six  years  from  the 
present  time,  and  yielding  a handsome  surplus  each  year, 
which  in  a fewT  more  years  will  be  equal  to  nearly  one-half 
the  entire  expenses  of  the  municipality. 

In  the  light  of  these  facts,  should  the  people  of  Cin- 
cinnati consider  the  disposal  by  sale  of  a property  which 
is  on  the  verge  not  only  of  being  self-sustaining,  but 
highly  remunerative?  By  the  time  the  rental  shall  nearly 
equal  the  interest  charge  the  total  deficit  in  the  interest 
charge,  which  the  people  of  Cincinnati  have  raised  by 
taxation  at  the  rate  of  about  1J  mills  annually,  will 
amount  to  over  $5,000,000.  It  will  require  but  a few 
years  after  1906  to  repay  into  the  treasury  of  the  city 
every  cent  of  this  deficit. 

The  people  of  Cincinnati  have  not  paid  dearly  for  en- 
tering the  immense  territory  which  has  thus  been  opened  to 
her  commerce.  At  the  time  the  property  will  cease  to  be 
a burden  to  the  people  it  will  have  been  in  operation  twen- 
ty-five years.  Assuming  that  the  deficit  met  by  the  peo- 
ple in  the  interest  charge  at  the  time  aggregates  $5,500,- 
000,  then  it  will  have  cost  but  $220,000  per  annum  as  an 
entrance  fee  for  our  commerce  into  the  South.  Aside 
from  this  we  have -gained  other  advantages  which  in  tliem- 


36 


selves  are  worth  more  to  the  City  of  Cincinnati  than  this 
sum  thus  annually  added  to  our  burden  of  taxation. 

It  would  be  possible  to  reduce  our  tax  levy  about  ten 
per  cent  if  the  levy  for  sinking  fund  and  interest  charge 
of  the  Cincinnati  Southern  Railway  were  eliminated,  and 
a subsidary  issue  of  bonds  made  to  provide  for  this  annual 
deficit  and  the  sinking  fund,  which,  in  view  of  the  large 
surplus  which  the  property  will  yield  in  a short  time, 
seems  to  be  amply  justified.  If  some  of  our  able  men  of 
finance  would  give  this  problem  their  attention  they  might 
render  the  people  of  Cincinnati  a service. 

The  question  naturally  arises,  whether  the  property  is 
worth  what  it  cost,  or  whether  it  was  extravagantly  con- 
structed. The  manner  in  which  it  was  constructed  is  a 
credit  to  the  men  who  built  it.  It  is  one  of  the  best  sin- 
gle track  railways  in  the  country,  and  considering  the 
nature  of  the  country  through  which  it  passes,  the  con- 
struction was  not  unnecessarily  expensive.  The  railway 
cost  §18,610,000,  or  a little  over  $55,000  per  mile,  ex- 
clusive of  rolling  stock.  The  capital  stock  of  the  lessee 
company  is  §3,000,000,  which  represents  the  equipment, 
which  is  equal  to  about  §9,000  per  mile.  Thus  the  rail- 
way ready  for  operation  cost  about  §64,000  per  mile.  The 
Louisville  and  Nashville  Railroad,  extending  southwardly 
from  Louisville,  has  a total  indebtedness,  including  bonds 
and  stock,  of  §69,000  per  mile.  Its  roadbed  is  not  equal 
to  that  of  the  Cincinnati  Southern  Railway.  The  Illinois 
Central  Railroad,  extending  from  Cairo  southwardly,  has  a 
total  indebtednes  of  §51,000  per  mile,  but  passes  through 
a country  much  more  favorable  to  inexpensive  construc- 
tion. These  comparisons,  taken  from  lines  operating  in 
the  same  general  field,  and  under  similar  conditions,  indi- 
cate' that  Cincinnati’s  railway  was  economically  con- 
structed. 

It  is  not  claimed  for  this  brief  article  to  discuss  in  de- 
tail all  the  possibilities  which  a study  of  the  economic 
questions  involved  therein  opens  up  to  one  investigating 
the  same,  nor  is  it  claimed  that  all  the  facts  given  are  cor- 
rect to  the  last  figure,  yet  it  will  give  the  people  who  own 
this  valuable  property  a general  idea  of  its  worth,  and  may 


37 


render  them  less  anxious  to  part  with  the  same.  No  busi- 
ness man  builds  up  a business,  and,  after  spending  millions 
of  dollars  upon  it  to  make  it  self-sustaining,  disposes  of  it 
immediately  before  it  becomes  self-supporting,  and  yet  this 
is  precisely  what  some  of  Cincinnati’s  stanchest  and  most 
acute  business  men  would  do  with  this  railway. 

The  judgment  of  Mr.  Ferguson  will  be  vindicated 
shortly,  and  Cincinnati  wTill  be  able  to  substantially  profit 
by  the  wisdom  and  forethought  of  the  promoters  of  the 
Southern  Railway.  L.  C.  FRITCH,  C.  E. 


From  the  Enquirer,  June  6,  1895. 

SIZING  UP 


The  Cincinnati  Southern — An  Expert  Report  On  the  Con- 
dition of  the  Road — The  City’s  . Interests  Amply 
Protected  by  the  Lessees — Betterments  Amounting 
to  $2,204,000— The  Work  That  Is  Yet  to  Be  Done. 


During  the  discussion  over  the  Cincinnati  Southern 
Road  and  the  city’s  interest  in  the  vsame,  which  occupied 
public  attention  for  several  months  preceeding  the  com- 
promise between  the  Southern  Railway  Company  and  the 
Cincinnati,  Hamilton  and  Dayton  interests,  Mr.  S.  M. 
Felton,  President  and  Receiver  of  the  Cincinnati,  New 
Orleans  and  Texas  Pacific  Company,  which  holds  the 
lease  of  the  Cincinnati  Southern,  frequently  stated  that 
the  physical  condition  of  the  property,  and  the  improve- 
ments and  betterments  constantly  being  made,  added 
largely  to  the  value  of  the  city’s  security.  A definite 
confirmation  of  this  statement  is  now  obtainable  from  an 
official  report,  made  at  the  instance  of  the  Trustees,  wrho 
employed  Mr.  G.  Bouscaren,  the  eminent  Consulting  En- 
gineer, to  make  a thorough  examination  and  report  on  the 
physical  condition  of  the  railway  and  its  appurtenances. 
Mr.  Bouscaren  has  completed  his  examination  and  ren- 
dered a detailed  report.  It  is  too  long  to  publish  in  full, 


38 


but  the  following  abstract  will  be  of  interest  to  all  who 
care  to  know  the  condition  of  Cincinnati’s  railroad : 

i 

FROM  MR.  BOUSCAREN’S  REPORT. 

The  original  60-pound  iron  and  53-pound  steel  rails 
used  for  the  construction  of  the  main  track  have  all 
been  removed  and  replaced  with  steel  rails  of  heavier 
pattern.  Eighty-five-pound  steel  is  now  laid  on  0.81 
miles,  75. pound  steel  is  now  laid  on  73.30  miles,  60-pound 
steel  is  now  laid  on  261.81  miles  ; total  length  of  main 
track  335.92  miles. 

The  rails  in  the  main  track  are  in  very  fair  condition. 
Seventy-five-pound  rails  were  being  distributed  at  several 
points  to  take  place  of  the  60-pound  rails.  The  company 
expect  to  lay  42  miles  this  year. 

Sixty-three  miles  of  automatic  block  have  been  intro- 
duced to  protect  the  operation  of  trains  through  the  princi- 
pal tunnels  and  bridges.  Interlocked  signals  have  been 
put  in  at  all  railroad  crossings  for  the  protection  of  trains. 
All  telegraph  stations  have  been  equipped  with  semaphore 
signals  at  the  stations,  and  a large  proportion  of  them  with 
distant  signals,  automatically  connected  with  the  home 
signals. 

All  these  appliances  have  added  greatly  to  the  dis- 
patch and  safety  of  operations. 

CONDITION  OF  TIES. 

The  average  number  of  ties  renewed  per  year  per 
mile  has  been  365,  The  average  length  of  service  of  ties 
in  track  has  been  7.24  years.  This  is  a fair  showing,  con- 
sidering the  conditions  of  climate  and  traffic.  Ties  are 
now  being  distributed  and  put  in  on  many  sections  of  the 
road,  and  the  ties  that  are  being  delivered  are  of  excellent 
quality. 

The  average  quantity  of  ballast  used  per  year  was 
52.782  cubic  yards.  The  condition  of  the  track,  with  re- 
spect to  ballast,  shows  that  a considerable  amount  of  work 
is  still  required  to  bring  the  track  up  to  the  proper  stand- 
ard. On  186  miles  the  ballasting  is  all  that  could  be  de- 
sired; on  150  miles  it  is  more  or  less  scant.  Gravel  bal- 
last is  used  on  75  miles;  furnace  slag  is  used  on  86  miles; 


39 


broken  rock  is  used  on  175  miles.  Stone  ballast  was  being 
distributed  and  put  in  at  various  places  on  the  northern 
division. 

BRIDGES  REPLACED. 

All  the  wooden  bridges  have  been  replaced  with  iron 
or  steel  structures,  and  about  three-fifths  of  the  wooden 
trestles  have  been  filled  or  replaced  with  structures  of  iron 
or  masonry. 

In  addition  to  the  2,983  linear  feet  of  iron  bridges 
and  viaducts  built  by  the  company,  one  of  the  spans  of 
the  north  approach  to  the  Ohio  River  bridge  and  two  spans 
over  Green  River,  a total  of  350  linear  feet,  have  been  re- 
built. Of  the  83  iron  structures  on  the  road  49,  including 
the  Kentucky,  Cumberland  and  Tennessee  River  bridges, 
are  in  good  condition  with  regard  to  painting  ; 34,  includ- 
ing the  Ohio  River  bridge,  are  in  need  of  painting. 

Fifty-three  intermediate  stations  are  provided  with 
combined  freight  and  passenger  depots,  five  wTith  small 
depots  and  waiting  rooms  and  fourteen  with  buildings 
built  on  the  right  of  way  by  private  parties  under  licenses 
and  used  for  depot  purposes.  Twenty-two  of  the  depots 
were  built  by  the  lessees  and  important  additions  made  to 
many  others. 

NEW  BUILDINGS  ERECTED. 

Twelve  section  houses  have  been  built  by  the  lessees. 
Five  stock  yards  have  been  built  and  others  extended. 
Five  track  scales  have  been  put  in,  Water  stations,  with 
impounding  reservoirs,  have  been  established  at  Sherman 
and  Williamstown.  Water  columns  have  been  provided  at 
the  most  important  stations,  and,  with  five  exceptions,  the 
old  tanks  have  been  replaced  with  50,000-gallon  tanks. 
Eleven  coaling  stations  for  the  supply  of  locomotives  have 
been  built.  Turntables  have  been  put  in  at  three  stations, 
and  all  the  round  houses  have  been  extended.  Eight  ad- 
ditional stalls  are  needed  at  Chattanooga.  A hotel  at  Oak- 
dale and  two  cottages  at  Oakdale  and  at  the  Tennessee 
River  bridge  have  been  constructed.  A steam  car  hoist  at 
Cincinnati  and  electric  plants  at  Ludlow,  Oakdale  and 
Chattanooga  have  been  built.  The  machine  shops  at  Lud- 


40 


low  and  Chattanooga  have  been  destroyed  by  fire  and  re- 
built, the  former  on  grounds  purchased  by  the  lessees. 
Various  other  structures,  including  sand  and  oil  houses, 
yardmasters’  offices,  interlocking  towers,  etc.,  have  been 
built  by  the  lessees. 

COST  OF  BETTERMENTS. 

On  June  30,  1894,  the  cost  of  the  betterments  made 
by  the  lessees,  which,  under  the  conditions  of  their  con- 
tract, must  revert  to  the  city  at  the  termination  of  the 


lease,  was: 

Track  and  roadbed $1,556,807  22 

Bridges 259,349  79 

Buildings 284,407  07 

Miscellaneous 9,451  77 

Engineering  (proportion) 43,958  37 

Amount  paid  for  work  and  wages 50,502  80 


Total $2,204,477  07 


The  approximate  estimate  of  the  cost  of  completing 
the  Cincinnati  Southern  Railway  by  the  lessees  under 
their  contract  with  the  city,  as  prepared  by  your  consult- 
ing engineer  in  November,  1880,  was  $2,786,462  25. 

WHAT  REMAINS  TO  BE  DONE. 

To  comply  with  the  specifications  of  the  lease  there 
remains  yet  to  be  done  arching  of  5,317  linear  feet  of  tun- 
nels, replacing  4,016  linear  feet  of  wooden  trestles  with 
embankments  or  with  permanent  structures  ot  iron  and 
masonry,  completion  of  the  block  system,  completion  of 
fencing,  additional  sidings,  additional  buildings  and  exten- 
sion of  present  buildings. 

The  cost  of  these  improvements,  added  to  the  amount 
already  expended,  will  probably  exceed  your  engineer’s 
estimate,  owing  to  the  enlarged  equipment  in  buildings 
and  tracks  required  to  handle  a traffic  much  larger  than 
was  expected. 

The  bridges  built  by  the  lessees  during  the  last  five 
years  have  been  constructed  with  a due  regard  to  heavier 

loads. 


41 


ROLLING  STOCKfAND  EQUIPMENT. 

The  rolling  stock  and  locomotive  equipments  at  the 
beginning  of  the  lease  and  at  the  present  time  compare  as 
follows : 

Locomotives — October  12,  1881 , 55 ; June  30,  L894, 
104.  Increase,  49. 

Passenger,  Baggage  and  Express  Cars — October  12, 
1881,  38  ; June  30,  1894,  66.  Increase,  28. 

Freight  Cars  and  Cabooses — October  12, 1881, 1,482; 
June  30,  1894,  3,877.  Increase,  2,395. 

The  number  of  locomotives  has  been  increased  89 
per  cent. 

The  passenger  equipment  has  been  increased  74  per 

cent. 

Thel  fr eight  equipment  has  been  increased  161  per 

cent. 

Locomotives  of  increased  weight  and  power  have 
been  acquired  for  the  passenger  as  well  as  for  the  freight 
service.  Air  brakes  and  automatic  couplers  are  being  in- 
troduced on  freight  cars,  and  the  carrying  capacity  of  the 
cars  has  been  increased  from  30,000  pounds  to  50,000  and 
60,000  pounds. 

The  company  owns  67  acres  of  land  at  Kenton 
Heights  and  2 1-3  acres  at  Ludlow,  and  the  following 
buildings  and  stiuctures  erected  on  its  own  land,  viz., 
machine  shop  and  storehouse  at  Ludlow,  depot  at  Cardiff, 
turntable  at  Burgin. 

The  amount  paid  by  the  company  to  the  Cincinnati 
Railroad  Company  and  the  Trustees  for  their  equipment 
October  12,  1881,  was  $1,865,773  88  ; the  cost  of  ad- 
ditional equipment  has  been  $1,161,539  21.  Total  amount 
of  capital  invested  is  $3,027,313  09. 

AMPLE  PROTECTION  FOR  THE  CITY. 

As  this  property  stands  as  a securiry  for  the  faithful 
performance  of  the  conditions  of  the  lease,  the  city’s  in- 
terests are  better  protected  now  than  they  were  at  the  be- 
ginning of  the  lease. 

In  closing  this  report  it  is  proper  that  I should  call 
your  attention  to  the  figures  given  by  the  President  o 


42 


the  operating  company  in  his  last  annual  report  in  review- 
ing the  operations  of  the  road  from  the  beginning  of  the 
lease  to  June  30,  1894. 

The  figures  for  this  period  of  18  years  and  8^  mouths, 
which  fairly  represents  an  average  condition  of  trade,  but 
embraces  the  years  of  the  lowest  rental,  are  : Gross  re- 
ceipts, $43,635,383  28;  operating  .expenses  and  taxes, 
$29,941,044  49;  net  receipts,  $13,694,318  79.  Cash 
rental,  $11,370,430  03;  cost  of  betterments,  $2,204,- 
477  07  ; total  amount  paid  by  the  lessees,  $13,574,907  10  ; 
balance,  $119,411  69. 

Practically  the  entire  net  earnings  of  the  company 
has  been  paid  to  the  city  in  rental  and  betterments. 

That  the  property  should  be  found  in  good  condition 
under  circumstances  so  onerous  is  a fact  very  creditable 
to  the  company  and  very  fortunate  for  the  city.  Respect- 
fully, G.  BOUSCAREN. 

May  25,  1895. 


From  the  Commercial  Gazette,  December  4,  1895. 
THE  EFFECT  UPON  CINCINNATI. 


Up  to  the  time  of  the  building  of  the  Southern  Rail- 
road, Cincinnati  was  not  a railroad  center.  It  was  a sort 
of  a side  station.  The  great  Louisville  and  Nashville  Rail- 
road had  its  terminus  at  Louisville  ‘The  Ohio  and  Missis- 
sippi was  here  because  it  could  not  help  it.  The  Cincin- 
nati, Hamilton  and  Dayton  was  a local  road,  as  was  also  the 
Cincinnati  and  Indianapolis.  But  now  all  the  great  trunk 
lines  have  centers  here,  including  the  Erie,  the  New  York 
Central,  Pennsylvania,  the  Chesapeake  and  Ohio,  theHam- 
ilton-and  Dayton,  and  the  Indianapolis,  the  Louisville  and 
Nashville,  with  their  vast  connections.  Thus  we  have  cen- 
tering here  from  all  the  points  of  the  compass  great  rail- 
roads until  Cincinnati  has  become  the  foremost  distribut- 
ing point  in  the  Ohio  Valley.  What  does  this  mean?  It 
means  in  the  first  place  that  Cincinnati  is  the  recipient  of 
raw  material  from  the  East,  the  West,  the  North,  and  the 


43 


South.  These  contribute  to  our  resources  as  a great  man- 
ufacturing city. 

Then  we  have  in  addition  our  vast  waterways.  These 
are  of  immense  importance  as  affording  cheap  transporta- 
tion and  cheap  fuel,  and  altogether  the  conditions  are  most 
favorable  for  the  distribution  of  manufactures  and  merchan- 
dise. This  marvelous  change  dates  back  in  a large  degree 
to  the  completion  of  the  Cincinnati  Southern  Railroad. 

There  is  presented  by  reason  of  these  changes  a great 
future  to  Cincinnati.  It  is  prepared  to  receive  from  the 
South  all  its  surplus  products  that  may  find  a market  in 
the  North,  and  it  is  prepared  to  ship  to  the  South  all  the 
the  products  of  this  center  and  this  section  for  which  there 
may  be  a market  in  that  great  and  growing  country. 

Wonderful  as  the  changes  have  been  in  the  last  forty 
years,  still  more  extraordinary  will  be  those  in  the  next 
twenty-five  years.  The  foundations  have  been  laid  for 
great  progress,  and  upon  these  enterprise  and  capital  will 
build  until  results  will  be  reached  that  even  the  present  gen- 
eration is  not  able  by  reason  of  its  limited  vision  to  con- 
template. 

We  have  often  said  that  the  New  South  is  bound  to  be 
the  most  prosperous  section  of  this  great  country.  Pros- 
perity is  not  the  outgrowth  of  mere  sentiment.  It  re- 
quires as  a foundation  to  build  upon  natural  and  varied 
resources.  These  the  Southern  States  possess.  They  have 
advantages  in  the  field,  in  the  forests,  in  the  mines,  and  in 
the  climate  that  no  other  section  of  this  country  is  capable 
of  exhibiting.  Now  all  that  remains  is  for  population,  en- 
terprise and  capital  to  go  in  and  possess  this  new  land,  full 
as  it  is  of  promise  and  over-running  as  it  is  with  natural  re- 
sources. 

The  New  South  of  which  we  speak  is  to  Cincinnati  the 
land  of  promise.  There  may  be  doubting  Thomases  among 
us,  but  these  will  be  converted,  and  the  future  genera- 
tions of  merchants,  manufacturers,  agriculturists  and  cap- 
italists who  may  hereafter  read  these  lines  may  be  only  sur- 
prised that  the  foresight  of  the  writer  was  not  equal  to 
the  hindsight  of  those  who  are  to  be  active  participants 
in  future  developments.  RICHARD  SMITH. 


44 


From  the  Commercial  Gazette,  June  8,  1895. 
THE  CINCINNATI  SOUTHERN  RAILROAD. 


This  is  one  of  the  available  assets  of  Cincinnati;  it 
is  a big  asset,  too  ; upon  it  the  city  can  count  for  enough 
money  to  come  within  $500,000  of  paying  the  municipal 
debt.  If  this  debt  should  be  wiped  out,  taxes  would  go 
down  largely,  and,  even  with  the  railroad  debt,  the  burden 
will,  within  a few  years,  be  largely  diminished.  When  the 
outstanding  seven-and-three-tenths,  seven-per-cent.,  and 
six-per-cent,  bonds  shall  be  funded  in  four-per-cents,  the 
rental  will  afford  a surplus  of  $400,000,  or  more.  We 
must  endure  the  high  rates  of  interest  a few  years  longer, 
but  then  it  is  always  pleasant  in  darkness  to  be  able  to  see 
light. 

In  view  of  present  conditions,  it  is  pleasant  to  know 
that  the  physical  condition  of  the  road  is  good,  that  the 
operating  company  has  dealt  fairly  by  the  city,  and  has  ful- 
filled so  far  the  obligations  of  its  lease. 

The  report  of  Engineer  Bouscaren  * on  the  physical 
condition  of  the  road  makes  cheerful  reading  for  the  Cin- 
cinnati taxpayers.  It  shows  that,  of  the  earnings  of  the 
road,  considerably  over  two  million  dollars  have  been  used 
in  betterments,  and  that  now  the  road,  as  security  for  the 
lease  is  much  better  than  it  was  when  the  present  operating 
company  took  charge  of  the  business. 

This  is  quite  different  from  the  gloomy  forebodings  of 
mistaken  friends  of  Cincinnati,  who  have  recently  advo- 
cated the  sale  of  the  road.  These  persons  expended  their 
literary  efforts  in  depreciating  the  road,  and  predicted  ter- 
rible results  if  the  city  should  continue  its  ownership.  All 
those  evil  foreshadowings  have  been  set  at  rest  by  the  ex- 
haustive report  of  Mr.  Bouscaren.  His  observations  are 
valuable  because  they  are  reliable,  and  because  they  show 
that  the  lessees  have  greatly  improved  the  load  as  to  side 
tracks,  new  rails,  locomotives,  passenger  and  freight  cars, 
tunnels,  tracks,  and  bridges.  The  sufferer  by  the  recent 
depression  in  business  has  not  been  the  city  but  the  lessees. 
These  have  been  without  dividends  for  a good  long  time, 


See  page  38-43. 


45 


while  the  work  of  improving  the  property  has  gone  forward 
as  far  and  as  rapidly  as  could  reasonably  be  expected. 

Taking  it  altogether,  the  Cincinnati  Southern  Railroad 
compares  favorably  with  most  of  the  roads  that  enter  this 
city,  and  is  proving  itself  equal  to  an  increased  traffic, 
which  is  sure  to  come,  and  is  already  coming,  from  the  de- 
velopments of  the  New  South.  , 

Competent  judges  who  keep  their  eye  on  the  future 
know  full  well  that  the  period  of  prosperity  upon  which 
the  country  is  now  entering  will  result  in  great  develop- 
ments at  the  South,  and  that  from  these  the  business  men 
of  Cincinnati  will  secure  great  advantages,  and  the  South- 
ern Railroad  an  immensely  increased  traffic.  It  is  to  be 
hoped  that  the  new  ownership  of  the  operating  company, 
which  means  the  Cincinnati,  Hamilton  & Dayton  Railroad 
Company,  will  prove  as  satisfactory  in  maintaining  and  ex- 
tending the  physical  condition  of  the  property  as  did  that 
management  which  is  now  temporarily  in  the  hands  of  a 
receiver. 

One  feature  of  Mr.  Bouscaren’s  report  can  not  fail  to 
reflect  seriously  upon  the  city,  and  that  is  the  want  of  ade- 
quate or  even  reasonable  terminal  facilities.  * Here  we  have 
a great  railroad  and  a great  bridge  connecting  our  city 
with  the  South,  which  is  compelled  to  rent  a passenger  sta- 
tion and  a freight  depot.  It  has  hardly  room  enough  to 
turn  around,  and  is  compelled  to  do  much  of  the  work  of 
making  up  trains  on  the  other  side  of  the  river.  There  has 
been  a seeming  necessity  for  this  economy  on  the  part  of 
the  city.  The  bonded  debt  looks  large,  and  it  is  large,  and 
few  people  felt  inclined  to  increase  it  by  providing  proper 
terminal  facilities. 

But,  in  the  course  of  time,  all  this  will  be  overcome, 
and  certainly  the  great  traffic  between  Cincinnati  and  the 
South  will  find  adequate  accommodations  in  the  shape  of 
terminal  facilities. 

At  this  time,  too,  looking  into  the  immediate  future,  it 
is  pleasant  to  observe  that  crop  reports  from  the  South  are 
decidedly  favorable  as  compared  with  other  sections  of  the 
country.  This  means  business,  and  points  to  the  time  when 
the  South  will  prove  to  Cincinnati  what  the  Northwest  and 
West  have  proved  to  Chicago  and  St.  Lonis. 

* See  page  47.  46 


From  the  Commercial  Gazette,  January  14,  1896. 
TERMINALS 


For  the  Southern  Road  Back  of  Lincoln  Park — Plat  Show- 
ing the  Location  of  the  Proposed  Building — What 
Has  Been  Done  Toward  Fulfilling  the  Obligations 
of  the  City. 

The  City  of  Cincinnati  having  failed  to  provide  termi- 
nal facilities  for  the  use  of  the  Cincinnati  Southern  Rail- 
way, it  was  necessary  for  the  Cincinnati,  New  Orleans  & 
Texas  Pacific  Railway  Company  to  endeavor  to  supply  the 
deficiency.  This  it  undertook  to  do  by  acquiring  owner- 
ship by  perpetual  lease,  with  privilege  of  purchase,  of  cer- 
tain lands  lying  between  McLean  avenue  and  the  west  line 
of  Lincoln  Park.  In  order  to  be  of  use  for  terminal  facil- 
ities, it  was  necessary  that  this  land  should  be  in  one  body; 
to  accomplish  this,  it  became  necessary  to  obtain  vacation 
of  certain  parts  of  certain  streets  which  divided  this  tract 
of  land. 

The  portions  of  the  streets  it  thus  became  necessary 
to  vacate  were : That  part  of  Dalton  avenue  between  Ken- 
ner and  Hopkins  streets  ; that  part  of  Hopkins  between 
Dalton  and  McLean  avenues;  that  part  of  Clark  street  from 
Dalton  avenue  to  McLean  avenue;  116  feet  off  the  west  end 
of  Blackford  street ; Sedgwick  street  between  Dalton  and 
McLean  avenues  ; Curran  street  between  Hopkins  and  Ken- 
ner. The  parts  of  streets  and  streets  thus  to  be  vacated, 
are  represented  by  the  diagram.  None  of  these  are  built 
streets,  except  the  part  of  Dalton  avenue,  and  that  consists 
only  of  a fill  made  by  the  owners  of  the  abutting  lots, 
without  paving,  gutters,  or  curbs.  The  larger  part  of  this 
tract  is  a deep  hole,  and  all  the  streets  except  that  part  of 
Dalton  avenue  already  mentioned,  exist  merely  on  paper. 

The  railway  company  proposed  to  open  and  pave  Lin- 
coln Place  in  connection  with  the  vacation  project.  Appli- 
cation was  made  by  the  C.,  N.  0.  & T.  P.  Railway  Com- 
pany in  May,  1892,  to  the  Court  of  Common  Pleas,  of  this 
county  to  have  said  streets  vacated  in  pursuance  of  Section 


47 


2655  et  seq.,  of  the  Revised  Statutes  of  Ohio.  The  matter 
was  heard  before  Judge  Howard  Hollister  in  February, 
1894,  upon  the  important  and  interesting  question  whether 
it  was  conducive  to  the  general  interest  of  the  city  to  de- 
clare such  streets  vacated,  with  a view  of  obtaining  a con- 
venient block  of  land  whereon  to  place  the  terminal  facili- 
ities  of  the  Southern  Railway. 


II _JL_) 

II  H 1 


Diagram  of  Southern  Railway  Possessions  East  of  McLean  Avenue, 
Showing  Location  of  Proposed  Buildings. 


The  vacation  was  resisted  by  the  Corporation  Counsel 
of  the  City  of  Cincinnati,  and  a number  of  persons  own- 
ing property  in  the  vicinity.  The  hearing  was  a very  elab- 
orate and  enlarged  one,  wherein  the  testimony  of  the  most 
prominent  citizens  of  this  city  was  taken.  The  question 
was  thoroughly  gone  over,  and  in  due  course  the  judge  de- 
livered an  elaborate,  and  what  is  considered  to  be  a very 
able  and  learned  opinion,  reviewing  the  entire  subject  of 


48 


the  need  of  the  Southern  Railway  for  terminal  facilities 
in  this  city,  and  the  propriety  of  the  selection  of  this  tract 
of  land  for  that  purpose. 

The  most  prominent  objection  against  vacation  was  the 
fear  expressed  by  the  then  Mayor  of  the  city  and  some  of 
the  members  of  the  Board  of  Legislation,  that  a vacation 
of  these  streets  in  favor  of  the  lessee  company,  would  give 
it  an  advantage  that  might  be  used  at  the  expiration  of  the 
present  lease  to  extort  from  the  city  favorable  terms,  in  the 
case  of  a sale,  or  new  lease  of  the  road;  and  that  a vaca- 
tion of  these  streets  should  not  be  made  until  all  ground 
for  that  fear  was  removed. 

The  Court  in  its  opinion  provided  against  the  possible 
use  of  such  alleged  advantage  by  requiring  that,  before 
vacation  of  such  streets  and  portions  of  streets  took  place, 
the  lessee  company  should  execute  and  deliver  to  the  city 
of  Cincinnati  an  agreement  in  writing  that,  after  the  expi- 
ration of  the  present  lease  of  the  Southern  Railway,  the 
city  of  Cincinnati  should  have  the  right  to  buy  from  the 
lessee  all  the  land  abutting  on  the  parts  of  the  vacated 
streets  at  the  same  price  which  the  lessee  company  paid 
therefor,  with  6 per  cent,  interest  added ; and  also  the  right 
to  buy  all  improvements  placed  thereon  by  said  lessee  com- 
pany at  the  fair  cash  value  of  the  same,  to  be  determined 
by  arbitration,  in  case  the  parties  should  not  agree. 

Other  restrictions  of  less  importance  were  placed  upon 
the  right  to  vacate  said  streets,  and  the  interests  of  the  city 
and  the  public  was  most  carefully  guarded  and  protected. 

Following  after  the  question  of  the  vacation  of  these 
streets  was  another  question  relating  to  the  damages  that 
owners  of  property  may  suffer.  This  portion  of  the  ques- 
tion had  not  heretofore  been  passed  upon,  and  was  reserved 
for  determination  of  a jury.  It  came  before  the  regular 
jury  in  Judge  Hollister’s  room,  Monday,  January  6,  and 
ended  Friday  afternoon  in  a verdict  under  direction  of 
the  Court,  of  ‘‘  no  damage  ” to  the  property  holders, 

There  is  now  nothing  to  interfere  with  the  company 
proceeding  to  the  erection  of  the  proposed  buildings  indi- 
cated in  the  accompanying  cut,  which  they  must  do  before 
they  close  the  streets. 


49 


From  the  Post,  January  27,  1896. 

HOLD  IT 


A d in  Time  It  Will  Become  a Gold  Mine — What  Trustee 
Smith  Says  of  the  Southern — Best  Property  Owned 
by  Any  Municipality — Extracts  from  a Speech  of 
M.  E.  Ingalls — What  He  Would  Do  if  the  Road 
Were  His. 


“ What  is  your  advice  concerning  the  disposal  of  the 
Cincinnati  Southern?”  was  the  question  put  to  Harry  R. 
Smith  by  a Post  reporter.  “ Leave  it  alone,”  was  the 
ready  response  of  the  veteran  trustee.  “ It’s  the  best  piece 
of  property  owned  by  any  city  in  the  country.  I am  not 
in  favor  of  selling  it,  and  never  have  been.  I have  some 
plans  for  future  action  which  I think  if  carried  out  would 
place  the  matter  in  such  a shape  that  it  would  be  of 
great  benefit  to  the  tax-payers  of  Cincinnati.  In  1902, 
when  the  first  $10,000,000  worth  of  bonds  fall  due,  there 
will  be  to  the  credit  of  the  Southern  Railway  in  the 
sinking  fund  something  like  $6,500,000.  I would  not 
use  this  money  to  pay  off  bonds,  but  would  reissue  the 
$10,000,000  falling  due  at  that  time  at  the  lowest  possible 
interest,  say  4 per  cent.  even.  In  1906  and  1909,  when 
the  remainder  of  the  bonds  fall  due,  we  would  have  enough 
money  to  take  them  up,  thus  leaving  only  the  $10,000,000 
against  the  rental  of  the  road.  These  we  could  take  up 
from  time  to  time,  and  eventually  own  the  road  without 
being  in  debt  a cent. 

“ No,  I don’t  think  the  rent  should  be  reduced,  and  I 
don’t  think  that  if  it  is  not,  the  company  in  control  will  al- 
low the  road  to  get  into  a bad  physical  condition.  In  the 
first  place,  if  the  rent  is  not  paid  we  have  a lien  on  the  en- 
tire rolling  stock  of  the  company,  and  the  road  with  its 
complete  equipment  would  revert  back  to  the  city,  and  I 
believe  that  we  could  re-rent  it  in  this  shape  for  $1,000,000 
a year  for  100  years.  Now,  if  they  pay  this  rental,  they 
must  keep  the  road  up,  for  a road  nowadays  must  be  as 
good  as  its  competitor  in  order  to  get  business.  I am  in 


50 


favor  of  making  a long  year  or  perpetual  lease  to  the  high- 
est holder  when  the  present  lease  expires.  Two  or  three 
years  since  when  the  two  companies  or  parties  who  are  now 
jointly  controlling  the  road  were  lighting  with  all  their 
might  for  the  control,  they  knew  as  practical  railroad  men 
just  what  the  road  was  doing  and  could  do,  and  were  both 
anxious  to  get  the  property.” 

Incidental  upon  the  present  agitation  a speech  made 
last  April  before  the  Young:  Men’s  Business  Club  by  Presi- 
dent Ingalls  is  of  general  and  renewed  interest.  After 
giving  a short  history  of  the  road  he  said : 

“In  March,  1893,  the  company,  on  petition  of  its  of- 
ficers, was  put  in  the  hands  of  a receiver  by  the  United 
States  Court  at  Cincinnati.  This  was  on  account  of  a 
judgment  obtained  against  the  company  by  parties  on  ac- 
count of  an  overissue  of  its  own  stock  by  its  Secretary,  and 
not  on  account  of  the  burden  of  the  lease. 

“ The  question  is  asked  me  what  would  I do  with  the 
Southern  Railway?  If  I owned  it  I would  go  on  collecting 
my  rent  of  the  present  lessee  so  long  as  he  can  pay  or  so 
long  as  his  property  is  good  for  it,  and  considering  the  as- 
sets of  the  present  company  are  worth  over  $2,000,000  at 
these  depressed  prices,  considering  there  is  a personal  lia- 
bility on  every  stockholder,  and  considering  the  further 
fact  that  the  loss  in  the  two  worst  years  ever  known  in 
railways  has  been  less  than  $200,000  a year,  I should  not 
consider  that  I had  a bad  lease.  I would,  however,  in 
this  case,  advise  that  the  city  procure  legislation  author- 
izing the  trustees  of  this  railway,  with  the  approval  of 
the  Sinking  Fund  Commissioners,  to  make  such  modifica- 
tions as  they  thought  in  the  interests  of  the  city  in  the 
present  lease,  and  I would  also  authorize  them  to  make 
a new  lease  at  the  expiration  of  the  present  one,  for  100 
years,  renewable  forever,  upon  such  terms  as  they  deemed 
best  for  the  interests  of  Cincinnati.” 

In  the  same  speech -he  quotes  as  follows  from  Presi- 
dent Felton’s  annual  report : 

“ The  results  for  the  past  year,  showing,  as  they  do,  a 
decrease  of  nearly  $600,000  of  gross  revenues,  are  cer- 
tainly very  disappointing,  following  upon  large  decreases  in 

51 


LIBRARY 

UNIVERSITY  OF  1LU 


previous  years,  but  when  the  net  results  are  considered  they 
are  much  more  favorable,  especially  when  these  net  results 
have  been  obtained  without  allowing  the  condition  of  the 
property  to  depreciate. 

“ The  business  depression  of  the  past  year  is  probably 
the  worst  that  we  will  be  obliged  to  face.  The  history  of 
the  fiscal  year  from  commencement  to  end  is  remarkable. 
Inaugurated  with  the  severe  panic  of  July,  followed  by  dis- 
appointing legislation  in  Congress,  the  long-drawn-out  agi- 
tation of  the  tariff  question,  supplemented  by  the  greatest 
coal  strike  ever  known,  and  finally  closing  with  the  most 
gigantic  railroad  strike  ever  inaugurated  in  this  country, 
there  is  little  wonder  that  the  gross  results  have  been  so 
unsatisfactory.” 


From  the  Commercial  Gazette,  January  30,  1896. 
SALE  OF  THE  SOUTHERN. 


That  perennial  job,  the  sale  of  the  Cincinnati  South- 
ern, is  again  being  agitated.  This  road  was  built  by  the 
city,  with  the  enthusiastic  approval  of  its  citizens,  for  a 
purpose.  That  purpose  was  to  provide  a trunk  line  rail- 
road directly  to  the  heart  of  the  South ; to  emphasize  the 
geographical  claim  of  Cincinnati  that  it  was  the  natural 
market  of  the  South,  and  to  prove  beyond  question  our  con- 
fidence in  the  future  prosperity  of  that ; section.  Every 
reason  adduced  in  favor  of  the  building  of  the  road  twenty 
years  ago  stands  as  an  argument  to-day  against  its  sale. 

The  only  forcible  argument  in  favor  of  the  sale  of  the 
road  is  the  financial  one,  and  when  examined  it  only  shows 
that  figures  can  and  do  lie.  In  a nutshell,  the  argument 
is : The  interest  on  the  Southern  bonds  amounts  to  over 
$1,300,000,  the  rental  is  $1,000,000  ; therefore  the  city 
loses  $300,000  a year  by  owning  the  road. 

But  suppose  the  road  were  sold.  The  bonds  would  re- 
main out  and  interest  would  go  on  jnst  the  same  until  they 
fell  due.  And  when  they  fall  due  they  can  easily  be  re- 
funded at  a lower  rate  of  interest.  For  illustration  : 


52 


Iii  1902  $10,000,000  of  these  bonds  will  fall  due. 
They  can  be  easily  refunded  at  four  per  cent,  or  lower.  At 
the  former  figure  the  interest  charges  on  the  Southern 
bonds  will  then  be  $1,059,000  a year,  against  which  could 
be' counted  the  rental,  then  $1,090,000*  The  rental  would 
more  than  pay  the  interest.  When  the  next  bonds  fall 
due,  in  1906  and  1909,  the  road  would  have  enough  money 
in  the  hand*  of  the  Sinking  Fund  Trustees  to  take  them 
up,  leaving  out  $10,000,000  at  four  per  cent,  (or,  it  may 
be  lower — possibly  three  per  cent).  Then  the  maximum 
interest  charge  would  be  $400,000  per  annum,  against 
which  the  city  would  have  an  annual  rental  of  $1,250,- 
000  a year,  or  a clear  profit  of  $850,000  per  year. 

The  plea  for  a reduction  of  the  rental  is  based  upon 
the  earnings  of  the  road — earnings  manipulated  to  give 
a semblance  of  justice  to  the  plea . Every  railroad  man 
knows,  though  few,  if  any,  will  admit,  that  the  lessees  of 
the  road  have  never  tried  to  build  up  its  traffic.  Only 
enough  business  has  been  allowed  to  go  over  it  to  par- 
tially pay  the  rental.  If  the  lessees  choose  to  dance  to 
this  music  they  should  pay  the  fiddler  themselves.  There 
is  no  reason  why  the  Queen  City  should  pay  a bonus  to 
the  men  who  seek  to  ruin  her  most  valuable  piece  of 
property. 

From  the  Times-Star,  February  27,  1896. 

A PERPETUAL  LEASE. 


An  Open  Letter  to  Chairman  Appling  on  the  Southern 
Railroad. 


Hon.  H.  J.  Appling,  Chairman  Committee  Board  of  Legis- 
lation: 

My  Dear  Sir — I regret  exceedingly  that  I did  not 
know  of  the  meeting  of  your  committee  Tuesday  afternoon 
for  the  purpose  of  discussing  the  question  of  the  sale  of 
the  Southern  Railroad.  I should  have  made  it  my  busi- 
ness to  be  present  and  give  the  views  of  the  minority  of 
the  Sinking  Fund  Trustees  in  that  matter.  The  resolution 


53 


was  passed  by  a majority  vote  of  Messrs.  Dexter,  Anderson 
and  Freiberg,  Mr.  Hinkle  and  myself  not  being  present  at 
the  time.  Mr.  Hinkle  afterwards  approved  the  resolution. 
Speaking  for  myself,  I have  always  advocated  a perpetual 
lease  of  the  road  and  desire  to  give  to  your  committee,  in 
view  of  the  statements  made  by  Mr.  Dexter,  my  reasons 
therefor.  The  proposition  upon  which  all-  parties  agree  is 
that  the  railroad  company  having  charge  of  the  property 
ought  to  secure  a perpetual  interest  in  order  that  it  may  be 
in  a position  to  make  permanent  improvements.  It  is  un- 
fair to  expect  a company  to  make  permanent  improvements 
upon  a property  when  it  has  only  a terminable  lease.  The 
chief  thing  to  be  secured  is  a perpetual  interest  in  the 
city’s  property.  This  can  be  acquired  in  two  ways ; either 
by  sale  or  by  a perpetual  lease.  Mr.  Dexter  favors  the 
sale.  His  plan  is  to  sell  the  property  tor  a fixed  sum,  say 
$18,000,000,  and  take  in  pay  bonds  for  that  amount  which 
shall  be  a portion  of  an  issue  of  $25,000,000  to  be  secured 
by  a blanket  mortgage  upon  the  road.  This  is  done  upon 
the  theory  that  the  new  company  must  have  a fee  simple 
title  in  order  to  raise  money  for  betterments  by  mortgage. 
My  idea  is  to  give  a perpetual  lease  to  the  new  company 
at  a certain  rental.  Without  committing  myself  absolutely 
to  the  terms  I should  favor  the  extension  of  the  present 
lease  perpetually  at  the  reduced  rental  of  $1,000,000  per 
annum.  In  other  words,  the  new  company  should  take 
the  present  lease  and  at  its  termination  the  rental  should 
be  reduced  from  one  and  one-quarter  millions  to  one  mil- 
lion per  annum.  At  the  close  of  the  present  lease  the 
bonds  will  have  matured  and  the  city  will  be  able  to  refund 
the  indebtedness  on  a four  per  cent,  basis.  That  will  re- 
duce the  interest  which  the  city  will  be  obliged  to  pay 
upon  its  indebtedness  to  about  $750,000  and  the  surplus 
of  $250,000  out  of  the  rental  of  $1,000,000  can  be  put  into 
a sinking  fund  to  pay  the  original  indebtedness  or  it  can  be 
applied  to  improvements  for  our  city.  In  this  way  the 
benefit  to  be  derived  by  the  refunding  and  the  reduction  of 
the  rate  of  interest  will  be  divided  between  the  city  and 
the  new  company,  which,  in  my  opinion,  is  a fair  arrange- 
ment. I think  the  city  ought  to  get  some  permanent  ad- 


54 


vantage  and  some  permanent  income  above  the  interest 
which  it  pays  on  its  railroad  indebtedness.  The  city  and 
the  company  would  make  an  equal  division  of  the  benefits 
of  refunding.  Mr.  Dexter’s  idea  that  a surplus  income 
from  the  investment  ought  not  to  be  tolerated  because  it 
might  debauch  the  public  morals  is  simply  illusory  and 
not  worth  considering. 

Either  method  of  disposal  of  the  railroad  gives  to  the 
company  a permanent  interest  in  the  road.  That  is  the 
great  desideratum  to  be  aimed  at.  Mr.  Dexter’s  plan, 
however,  depreciates  our  security  by  placing  our  bonds  to 
the  amount  of  $18,000,000  upon  the  same  basis  as  the 
87,000,000  to  be  expended  on  the  road.  If  the  proposi- 
tion were  made  to  Mr.  Dexter  that  this  city  should  lend 
its  credit  to  the  new  company  or  should  vote  to  issue  new 
bonds  for  the  benefit  of  the  Southern  .Railroad,  he  would 
object  most  decidedly.  But  his  proposition  now  practi- 
cally means  for  the  city  to  lend  its  property  to  secure  to 
the  new  company  $7,000,000  in  bonds.  The  value  of  the 
$18,000,000  of  bonds  which  we  would  acquire  in  payment 
of  the  road  itself  would  depend  on  the  market  value  of 
$7,000,000  bonds  to  be  sold  for  betterments.  It  is  con- 
ceivable that  the  managers  of  a purchasing  company  might 
manipulate  the  earning  capacity  of  the  road  so  as  to  de- 
preciate the  value  of  the  bonds.  They  might  make  use  of 
the  $7,00,000  bonds  in  the  open  market  to  beat  down  the 
value  of  the  $18,000,000  bonds  in  our  treasury.  They 
might  bring  about  a sale  of  those  bonds  at  fifty  cents  on 
the  dollar.  The  city  is  helpless  because  she  can  not  pro- 
tect herself  in  Wall  street.  Mr.  Dexter  places  more  re- 
liance on  Wall  street  magnates  to  uphold  the  value  of 
our  property  than  upon  the  people  of  our  own  city.  I 
take  no  stock  whatever  in  Mr.  Dexter’s  dark  forebodings 
as  to  manipulations  which  would  be  made  to  secure  a 
change  in  a perpetual  lease.  I think  our  own  citizens 
and  our  own  city  officials,  would  be  more  jealous  in  the 
care  of  the  great  Southern  Railroad  property  than  would 
Eastern  capitalists  in  protecting  the  value  of  $18,000,000 
of  bonds  which  would  be  held  in  our  sinking  fund  treas- 
ury. 


55 


Mr.  Dexter  thinks  that  a leasehold  does  not  offer  a 
sufficient  basis  of  credit  upon  which  the  operators  can 
borrow  enough  money  to  improve  the  road.  My  view  is 
that  if  railroads  intend  to  act  fairly  with  the  city  in  the 
transaction,  it  will  be  just  as  easy  for  them  to  raise  money 
to  improve  a permanent  leasehold  as  to  improve  the  fee 
simple.  It  is  absurd  to  suppose  that  the  C.  H.  & D.  Rail- 
way Company,  with  $16,000,000  of  capital,  and  the  South- 
ern Railway  Company,  with  $170,000,000  of  capital,  can 
not  secure  either  cash  or  credit  sufficient  to  make  the 
necessary  permanent  improvements  upon  our  Southern 
Railway  in  case  they  held  a perpetual  lease,  I view  with 
suspicion  any  railroad  company  approaching  the  city  of 
Cincinnati  with  the  proposition  that  it  can  not  raise  suffi- 
cient money  upon  a perpetual  leasehold,  but  can  upon  a 
fee  simple  title. 

Mr.  Dexter  talks  about  the  credit  of  our  city.  In 
my  opinion  just  such  statements  as  he  is  making  before 
your  committee  do  more  injury  to  the  credit  of  Cincin- 
nati than  any  other  one  fact  of  which  I am  aware.  He 
is  systematically  bearing  our  city’s  credit,  and  his  state- 
ments are  given  weight  because  he  is  president  of  the 
Sinking  Fund  Board.  Our  Southern  Railroad  has  paid  its 
rent  up  to  the  present  time.  We  should  have  the  benefit 
of  that  actual  condition  of  affairs,  and  Mr.  Dexter  has  no 
right  to  prognosticate  evil  to  the  damage  of  our  city’s 
credit. 

Over  and  above  all  this  discussion  the  question  is 
whether  your  honorable  committee  should  follow  the  advice 
of  men  who  have  systematically  opposed  the  Southern 
Railroad  from  its  inception  to  the  present  time,  or  whether 
it  should  follow  the  advice  of  men  who  have  been  its 
friends  from  the  beginning  and  who  believe  that  the  city 
has  a splendid  pioperty  which  will  in  time  be  a source  of 
revenue  and  make  our  city  the  richest  in  the  country. 
Mr.  Dexter  talks  about  the  law  in  some  of  the  Eastern 
states  which  prevents  trust  companies  from  investing  in 
our  bonds.  That  will  take  care  of  itself  when  our  own 
people  cease  to  criticise  our  own  property  and  bend  every 
effort  to  the  upholding  of  our  own  credit.  Yours  very 
truly,  Charles  P.  Taft. 


56 


From  the  Commercial  Gazette,  April  1,  1896. 

DECRYING  OUR  OWN. 


We  read  with  a good  deal  of  surprise  the  views  of 
many  people  regarding  the  Southern  Railroad.  We  can 
hardly  believe  they  are  correctly  reported.  Or,  if  they  are 
correctly  reported,  it  seems  to  us  they  speak  without  due 
consideration. 

When  a man  has  something  to  sell,  he  does  not  de- 
preciate the  value  of  his  property.  He  exhibits  it,  if  it 
be  a horse,  in  the  most  favorable  way  ; or,  if  it  be  a house, 
he  shows  its  conveniences,  its  outlook,  its  good  neighbor- 
hood. Everything  he  can  do  to  enhance  in  the  eyes  of 
the  purchaser  the  value  of  that  which  he  has  to  sell,  he 
does.  Why  should  any  other  course  be  pursued  with  ref- 
erence to  the  great  railroad  which  the  city  owns? 

It  is  a great  property.  It  cost  a great  deal,  and  it 
would  cost  a great  deal  to  build  another  like  it  Its  route 
was  carefully  surveyed,  and  routes  across  mountains  are 
not  easy  to  find.  It  runs  between  the  largest  city  in  the 
Ohio  Valley  and  the  gateway  of  the  South.  Its  possession 
would  be  valuable  to  more  than  one  great  system.  The 
city  that  owns  it  is  a strong  one  and  a sound  one.  It  does 
not  have  to  sell.  The  rental  is  now  nearly  sufficient  to 
pay  the  interest  on  the  bonds.  Indeed,  if  there  be  taken 
into  account  the  interest  which’  is  paid  on  the  bonds  held 
by  the  sinking  fund  trustees,  the  diffeience  between  inter- 
est and  rental  is  only  about  $50,000. 

If  men  wanted  to  play  into  the  hands  of  buyers,  they 
would  not  talk  differently  than  some  are  talking  to-day. 
We  think  that  the  question  whether  the  road  should  be  sold 
or  not  depends  entirely  on  the  price  that  is  offered.  And 
we  think  further  that  unless  a price  is  named  that  is  fair 
to  the  city,  there  is  not  the  slightest  chance  that  the  voters 
of  the  city  will  vote  to  sell  it. 

Men  who  are  doing  figuring  to-day  should  calculate 
how  much  they  can  pay,  not  how  little. 


57 


From  the  Cincinnati  Enquirer,  April  1,  1896. 

PLAN  BY  WHICH  THE  SOUTHERN  CAN  BE  RE- 
TAINED BY  THE  CITY  WITH  PROFIT. 


Business  Men  Declare  the  Profferred  Advice  to  Sell 
Is  Given  Contrary  to  the  Best  Interests  of 
The  Citizens,  and  Set  Forth  Reasons. 


Here  is  a plan  for  the  disposition  of  the  Southern 
Road  problem  that  is  drawn  upon  an  entirely  new  pattern. 
It  was  evolved  by  a business  man  and  presented  at  a meet- 
ing of  business  men  held  for  an  entirely  different  purpose 
than  the  discussion  of  the  Cincinnati  Southern.  It  was 
taken  kindly  to  by  the  men  present  when  it  was  discussed, 
by  one  of  whom  the  details  were  elaborated  and  drawn  up 
in  the  form  in  which  the  scheme  is  herewith  set  forth. 

“The  plan  is  not  an  elaborate  one,”  said  the  Enquir- 
er’s informant.  “To  my  mind  it  simply  provides  a busi- 
ness-like way  of  treating  the  problem.  At  the  present  time 
the  city’s  debt  on  account  of  the  Cincinnati  Southern  is 
placed  at  $18,616,000.  These  figures  you  can  get  from 
the  report  of  the  Sinking  Fund,  as  well  as  all  others  that 
are  used.  Now,  the  Sinking  Fund  has  been  collecting  an- 
nually by  taxation  about  $90,000  toward  the  payment  of 
this  debt,  and  it  is  well  understood  that  these  collections 
invested  and  reinvested  amount  to  about  $4,000,000.  This 
in  itself  leaves  the  actual  liability  of  the  city  on  account 
of  the  road  at  $14,616,000.  That  is  an  object  lesson  in 
itself,  and  shows  that  the  citizens  have  been  led  to  look 
upon  their  Southern  road  debt  as  $4,000,000  more  than  it 
really  is.” 

“Again,  in  referring  to  the  interest  on  the  Cincinnati 
Southern  debt,  its  annual  sum  is  given  as  $1,272,584.  To 
apply  on  the  payment  of  this  annual  interest  there  accrues 
from  the  rental  of  the  road  $1,000,000,  and  from  profit 
on  bond  exchanges  $21,507,  or  a total  of  $1,021,507.  This 
leaves  a balance  to  be  raised  by  taxation  of  $251,077.  To 
pay  this  the  Sinking  Fund  has  added  to  the  duplicate  for 
1895  a tax  of  1.445  mills,  estimated  to  raise  $266,900. 


58 


Now,  why  not  credit  5 per  cent  on  the  $4,000,000  already 
collected  toward  paying  off  the  debt  of  the  road  and  in- 
' vested  by  the  Sinking  Fund?  This  makes  $200,000  earned 
on  money  that  is  properly  Southern  Road  money,  and  tak- 
ing it  from  the  annual  balance  to  be  paid  out,  leaves  $51,- 
077.  Doesn’t  this  look  like  the  annual  cost  of  the  road  to 
the  citizens  had  been  magnified  many  times?  Then  again, 
why  not  apply  the  $92,000  raised  annually  by  the  half  mill 
entry  on  the  duplicate  toward  paying  this  amount,  and 
carry  the  remainder  to  the  Sinking  Fund,  thus  relieving 
the  duplicate  of  1.445  mills,  and  thereby  reducing  the  cur- 
rent taxes?  From  this  it  will  appear  that  the  Cincinnati 
Southern  is  practically  carrying  its  interest  account,  is 
self  sustaining,  and  need  no  longer  be  a source  of  expense 
to  the  city. 

“Now,  here  is  another  thing.  In  1902  there  will  ma- 
ture $10,000,000  of  bonds  bearing  interest  at  7.3  per  cent, 
making  an  annual  amount  of  $730,000.  Refund  these 
bonds  at  four  per  cent  and  the  annual  total  interest  will  be 
$400,000,  or  a saving  to  the  city  of  $330,000.  At  the 
time  of  the  maturity  of  the  7.3  per  cent  bonds  the  rental 
of  the  road  will  be,  under  the  terms  of  the  present  lease, 
$1,250,000.  The  interest  account  will  then  be  $1,000,000. 
From  this  take  the  $330,000  and  you  have  $760,000  with 
an  income  of  $1,250,000,  yielding  to  the  city  a surplus 
of  $490,000.  If  this  annual  amount  should  be  put  in  the 
sinking  fund  it  would  in  less  than  twenty  years  wipe  out 
the  debt  and  leave  the  city  to  apply  all  the  income  of  the 
road  to  the  payment  of  other  debts. 

“I  understand  that  there  is  a scheme  on  foot  to  sub- 
mit to  the  people  a proposition  presumably  from  the  present 
lessees  of  the  road,  as  follows: 

“1.  To  fix  the  annual  rental  for  the  unexpired  term  of 
the  lease,  or  eleven  years,  at  $1,000,000  per  year. 

“2.  To  fix  the  annual  rental  after  the  expiration  at 
$720,000  per  annum  and  ten  per  cent  of  the  gross  earnings 
in  excess  of  $4,000,000. 

“3.  The  present  lessees  to  create  a sinking  fund  which 
will  in  sixty  years  wipe  out  the  city’s  debt,  and  thereby 
acquire  a fee  simple  title  to  the  property,  paying  thereafter 


59 


to  the  city  ten  per  cent  on  the  gross  earnings  in  excess  of 
$4,000,000. 

a4.  The  present  lessees  to  deposit  $1,000,000  in  Gov- 
ernment bonds  as  security  for  performance  of  the  contract. 

“This  proposition  involves: 

“1.  A donation  during  the  next  eleven  years  to  the 
present  lessees  of  $1,700,000,  being  $90,000  for  five  years 
and  $250,000  for  the  last  five  years  of  the  lease. 

“2.  A reduction  in  rental  to  the  present  lessees  during 
the  next  sixty  years,  at  $530,000  per  year,  of  $31,800,000 
to  enable  them  at  that  time  to  cancel  the  city’s  debt  on  ac- 
count of  the  road.  This  debt,  as  has  been  shown,  is  about 
$14,000,000,  and  this  would  mean  a net  donation  of  $17,- 
800,000,  or  nearly  the  original  cost  of  the  road. 

“This,”  said  the  merchant,  “is  practically  the  proposi- 
tion upon  which  it  is  proposed  to  ask  a popular  vote  under 
the  flimsy  guise  of  a proposal  to  sell  the  road.  Much  has 
been  said  and  written  lately  to  disgust  the  people  with  the 
Southern  Road,  and  to  beget  a disposition  to  sell  it  at  any 
price.  Why  are  these  citizens  so  anxious  to  make  the  pres- 
ent lessees  such  a donation?  Who  are  the  present  lessees? 
The  road  is  in  the  hands  of  a receiver  who,  under  the  di- 
rection of  the  United  States  Court,  is  operating  the  road 
and  paying  the  city  the  rental.  The  present  lessees,  names 
unknown,  are  standing  aside  and  looking  on,  no  doubt  hun- 
gry for  dividends,  but  who  they  are  is  something  no  fellow 
seems  able  to  find  out.  What  is  the  hurry  about  selling 
the  property?  Why  not  let  the  United  States  Court  alone 
and  see  how  it  will  come  out  ? There  is  one  point  in  which 
all  Cincinnatians  are  agreed,  and  that  is  that  as  long  as 
Judge  Taft  has  his  eye  on  the  gun  there  will  be  no  mon- 
keying with  the  city’s  interests,  and  all  talk  of  malfeasance 
by  the  receiver  is  the  merest  twaddle,  circulated  for  the 
sole  purpose  of  begetting  distrust  in  the  public  mind  to  in- 
duce people  to  vote  to  sell  or  give  the  road  away.” 


60 


From  the  Times-Star,  April  17,  1896. 


* 


TO  SELL  THE  SOUTHERN. 


The  Sinking  Fund  Trustees  at  their  special  meeting 
Thursday  afternoon,  decided  fo  meet  next  Monday  and  take 
action  on  the  receiving  of  a bid  for  the  Southern  Railroad. 
Corporation  Counsel  Hertenstein  stated  that  the  trustees 
are  not  bound  by  law  to  advertise  for  bids,  but  life  thought 
as  a matter  of  policy  advertisement  should  be  made,  as  the 
public  would  be  better  satisfied.  However,  advertising  does 
not  preclude  the  board  from  a private  negotiation.  Should 
the  road  be  sold  possession  can  not  be  given  till  October 
12,  1906.  President  Dexter  said  that  advertising  would 
be  a useless  expense,  as  there  will  be  but  one  bid.  Should 
general  advertising  be  decided  upon  European  papers  may 
get  a Cincinnati  contract. 


From  the  Commercial  Gazette,  April  19,  1896. 

THE  SOUTHERN’S  COST. 


An  assertion  should  be  capable  of  being  verified  by 
proof  or  per  contra  disproved  in  the  same  manner. 

Mr.  Dexter,  at  a late  meeting  of  the  Sinking  Fund 
Trustees,  as  reported  by  the  daily  papers,  said: 

“ The  road  (meaning  the  Cincinnati  Southern  Railway) 
could  to-day  be  built  for  much  less  than  it  originally  cost 
the  city.  That  cost  was  $18,000,000.  It  could  be  built 
for  about  $15,000,000.” 

Mr.  Dexter,  not  being  a railroad  man  or  civil  engineer, 
must  have  obtained  his  information  from  some  one,  and  so 
made  such  statement  without  his  own  knowledge  of  the 
facts. 

The  topography  of  the  country  through  which  the  line 
of  the  Cincinnati  Southern  Railway  passes  is  exceedingly 
rough,  probably  more  so  than  most  of  the  railroads  built  in 
the  United  States;  necessitating  many  tunnels  (twenty- 


61 


* 


six),  a large  number  of  long  and  expensive  bridges  and 
viaducts,  with  deep  cuts,  mostly  through  solid  rock  and 
heavy  embankments. 

In  his  work  on  American  railways,  Mr.  E.  Lavoine. 
Chief  Engineer  of  the  “ Ponts  et  Chaussees  ” and  Commis- 
sioner from  the  Minister  of  Public  Works  in  Prance,  at  the 
Centennial  Exposition  in  Philadelphia,  speaking  of  the  Cin- 
cinnati Southern  Railway,  says : “ This  road  approaches 
nearer  to, European  roads  in  its  construction  than  other 
railways  as  generally  built  in  America ; its  great  import- 
ance led  its  engineer  to  introduce  at  considerable  cost  im- 
provements which  were  only  realized  on  older  lines  after 
the  developments  of  the  traffic,  when  competition  forced 
their  adoption  as  a means  to  arrive  at  more  economical  op- 
erations.” 

The  Cincinnati  Southern  Railway,  336  miles  long, 
cost  per  mile  $53,572. 

The  Allegheny  Valley  Railway,  259  miles,  cost  per 
mile  about  $84,000. 

The  Chicago  and  Grand  Trunk  Railway,  326  miles, 
cost  per  mile  about  $60,000. 

The  Columbus,  Hocking  Valley  and  Toledo  Railway, 
329  miles,  cost  per  mile  about  $52,000. 

The  C.,  H.  and  D.  Railway  cost  per  mile,  single  track, 
$81,488. 

These  five  roads  had  none  of  the  physical  difficulties 
to  contend  with,  that  confronted  the  Cincinnati  Southern 
Railway — no  tunnels  or  expensive  bridges,  being  through 
a comparatively  flat  country. 

The  only  items  now  much  cheaper  than  when  the  Cin- 
cinnati Southern  Railway  was  constructed  are  metals — 
that  is,  rails,  bridges  and  viaducts. 

But  the  increased  weight  of  steel  used  in  the  bridges 
and  viaducts,  to  support,  with  safety,  the  largely  increased 
weight  of  the  rolling  stock  of  to-day  will  fully  offset  the 
lower  price  per  pound  of  the  metal. 

Steel  rails  will  cost  to-day  per  mile  laid  in  track,  in- 
cluding joints,  spikes,  switches  and  surfacing,  about  $5,500. 
They  cost  the  Cincinnati  Southern  Railway,  as  per  contract 
with  R.  G.  Huston  & Co.,  $6,022  95.  But  this  saving  of 


62 


a little  over  §500  per  mile,  will  be  more  than  offset  by  the 
increased  cost  of  right  of  way. 

Detailed  prices  of  substructure  paid  for  the  construc- 
tion of  the  Cincinnati  Southern  Railway  were  as  follows : 

*Earth  excavation,  per  cubic  yard,  15c. ; loose  rock  ex- 
cavation per  cubic  yard,  45c. ; solid  rock  per  cubic  yard, 
78c.;  tunnel  excavation  per  cubic  yard,  §2  85;  first-class 
masonry  per  cubic  yard,  §10  50;  second-class  masonry  per 
cubic  yard,  §7  50;  first-class  arch  masonry  per  cubic  yard, 
811:  second-class  arch  masonry  per  cubic  yard,  §8  50; 
box  culvert  masonry  per  cubic  yard,  $4.  These  prices  are 
no  lower  to-day.  * CIVIL  ENGINEER. 


From  the  Enquirer,  April  19,  1896. 

DISCUSSION 


On  the  Sale  of  the  Southern  by  the  Sinking  Fund  Trustees. 


The  Sinking  Fund  Trustees  met  yesterday  afternoon 
to  discuss  the  feasibility  of  advertising  for  bids  for  the  sale 
of  the  Southern  without  coming  to  a definite  conclusion. 
Mr.  Dexter,  after  being  fully  advised  by  Corporation  Coun- 
sel Hertenstein  in  reference  to  the  law  upon  the  subject, 
expressed  his  opinion  that  to  advertise  would  simply  result 
in  expense  without  accomplishing  anything.  In  his  opin- 
ion no  purchaser  would  be  found  for  the  road  on  which  a 
ten-year  lease  still  rested  except  those  who  were  now  in 
control.  Mr.  Dexter  argued  that  the  road  having  cost  but 
818,000,000,  and  the  city  receiving  §1,000,000  per  year 
rental,  was  all  that  could  be  expected.  In  this  the  rest  of 
the  members  coincided,  and  the  matter  was  laid  over  for 
another  meeting,  which  will  be  held  next  Monday  after- 
noon. 


* See  page 


63 


From  the  Commercial  Gazette,  April  19,  1896. 

MR.  EMERY’S  LETTER.  * 


The  timely  letter  from  Mr.  Thomas  Emery  on  the 
sale  of  the  Southern  Railroad,  published  in  yesterday’s 
paper,  attracted,  as  it  deserved,  wide  attention.  There 
are  not  many  men  in  this  city  whose  views  are  entitled 
to  as  much  respect  on  this  question  as  are  those  of  Mr. 
Emery.  He  is  one  of  the  heaviest  tax-payers  of  the  city. 
His  property  is  largely  in  real  estate.  He  can  not  escape 
the  tax-gatherer  if  he  would.  More  than  most  people, 
therefore,  he  is  directly  interested  in  the  Southern  Rail- 
road, for  on  its  success  or  lack  of  success  depends  a 
larger  or  smaller  amount  of  contributions  by  him  to  the 
City  Treasurer. 

He  speaks  from  the  standpoint  of  a capitalist  and 
landlord,  and  the  substance  of  what  he  says  is:  “This  is 
not  a good  time  to  sell  the  property;  the  worst  is  past; 
hold  the  road;  make  no  change  in  the  terms  of  the  lease.” 

We  see  the  Sinking  Fund  Trustees  are  considering 
the  terms  of  advertisement,  and  so  on ; also,  whether 
there  will  be  one  bid  or  many. 

Well,  Mr.  Emery’s  letter  from  far-off  Sahara,  comes 
in  the  nick  of  time.  It  serves  notice  on  possible  bidders 
that  there  are  men  in  the  city  with  great  interests  to 
protect,  who  are  not  disposed  to  see  this  property  sold 
for  a song.  It  will  do  no  good  to  make  a bid  which 
will  meet  the  opposition  of  those  tvho  look  with  sanguine 
eyes  on  the  future  of  the  road  under  city  control,  and  of 
those  who  are  able  and  willing  to  look  out  for  their  own 
interests  rather  than  see  the  road  sacrificed. 

We  have  no  private  word  from  Mr.  Emery.  We 
published  his  letter  as  it  was  sent.  We  do  not  desire  to 
put  any  interpretation  on  it.  Let  it  stand  as  it  came  and 
was  printed.  It  will  be  of  great  service  if  it  has  the  effect 
to  open  the  eyes  of  bidders  to  the  view  conservative 
and  responsible  men  in  the  city  take  of  the  property  and 
its  value.. 


* See  page  65. 


64 


From  the  Commercial  Gazette,  April  18,  1896. 

A VOICE  FROM  THE  DESERT 


To  the  Southern  Railroad  and  Its  Trustees. 


To  the  Editor  of  the  Commercial  Gazette: 

Biskra,  Desert  of  Sahara,  March  24. — There  appears 
to  be  a desire  on  the  part  of  the  owners  of  certain  rail- 
roads to  acquire  the  Southern  Road.  There  is  also  a 
freely  expressed  opinion  on  the  part  of  some  good  citizens 
that  it  is  desirable  that  the  city  should  get  rid  of  the  prop- 
erty at  the  first  opportunity. 

The  policy  of  the  city’s  constructing  the  road  was  very 
questionable.  The  road  is  built,  however.  The  heavy  bur- 
den of  taxation  is  almost  over.  The  lease  has  many  years 
yet  to  run.  The  rent  is  being  paid,  with  no  great  prospect 
of  default,  now  that  business  is  improving.  Why,  then, 
sell  the  road  now  ? There  is  a time  to  buy,  and  a time 
to  sell  property.  Does  any  one  think  that  this  is  a proper 
time  to  dispose  of  a railroad,  when  a large  proportion  of 
the  lines  is  in  the  hands  of  receivers,  and  when  over  10,000 
miles  of  road  have  lately  been  organized  in  the  most  dras- 
tic way  ? , 

Capitalists  are  most  thoroughly  disgusted,  not  only 
with  the  treatment  they  have  received  in  the  various  reor- 
ganizations, but  with  hostile  State  legislation,  by  w7hich 
a fair  remuneration  for  services  rendered  is  denied  the 
roads. 

With  this  plain  statement  of  facts,  no  good  business 
man  will  say  that  the  present  is  a good  time  to  sell  the 
property.  The  worst  is  past.  Hold  the  road.  Make  no 
change  in  the  terms  of  the  lease.  Every  landlord  knows 
that  all  changes  desired  by  the  tenant  benefits  the  lessee 
at  the  expense  of  the  lessor.  The  termination  of  the  lease 
is  the  proper  time  to  consider  changes. 

At  the  end  of  the  present  lease  the  city  will  most  likely 
be  in  possession  of  a piece  of  property  which,  in  addition 
to  paying  the  interest  on  its  liens,  will  pour  annually  into 
the  city  treasury  a sum  that  will  astonish  the  gentlemen 
who  now  wish  to  sell. 


65 


It  is  to  be  regretted  that  politics  seem  to  influence  the 
Judges  in  the  appointment  of  the  Trustees.  What  is 
wanted  is  faithfulness  to  the  city’s  interests,  and  ability. 
Men  of  large  capacity  are  scarce.  The  position  should  not 
be  given  to  old  men,  needing  the  salary,  but  not  gifted  with 
the  necessary  firmness  and  ability.  Nor  should  it  be 
awarded  to  very  young  men  without  experience.  To  com- 
pete with  the  able  railroad  men  who  stand  ready  to  seize 
the  property,  first-class  talent  is  required. 

THOMAS  J.  EMERY. 


The  Cincinnati  Enquirer,  June  5,  1896. 

WHAT  THE  CINCINNATI  SOUTHERN  WILL  DO. 


The  Railway  Age,  in  its  last  issue,  says  the  State  of 
Illinois  is  fortunate  in  having  a railway  which  not  only 
pays  in  taxes  almost  the  whole  ordinary  expense  of  the 
state  government,  but  is  willing  to  advance  money  before 
it  is  due  to  help  the  Commonwealth  out  of  a tight  place. 

The  Illinois  Central  Railroad  Company  has,  for  the 
second  time  this  year,  come  to  the  rescue  of  the  state  treas- 
ury, and  enabled  it  to  resume  the  payment  of  its  warrants 
by  advancing  $300,000  on  account  of  taxes  that  would  be 
due  from  the  company  this  month. 

Under  the  provision  of  its  charter,  by  which  the  com- 
pany pays  the  state  7 per  cent  on  the  gross  earnings  of  the 
705  miles  of  original  road,  the  company  has  contributed 
to  the  state  treasury  over  $15,000,000.  The  Central,  un- 
der the  agreement,  now  pays  to  the  State  of  Illinois  over 
$700,000  annually. 

The  Cincinnati  Southern  ought  very  soon  to  be  paying 
a handsome  sum  into  the  treasury  of  the  city  of  Cincinnati. 
With  the  rental  for  the  property  increased  $90,000,  be- 
ginning next  October,  and  with  the  seven  and  three-tenth 
per  cent  bonds  that  fall  due  in  1902  refunded  into  even 
four  per  cents,  the  city  will  have  a clear  annual  net  income 
of  over  $200,000  from  the  Cincinnati  Southern  over  all 


66 


interest  charges,  even  with  the  sinking  fund  collecting  in- 
terest on  Southern  Railroad  bonds  that  have  been  bought 
up  with  the  people’s  money  and  should  be  retired.  Even 
after  providing  $90,000  annually  for  sinking  fund  pur- 
poses, the  city  will  be  more  than  $100,000  to  the  good 
each  year. 


The  Cincinnati  Enquirer,  June  14,  1896. 

ACCEPTED. 


The  Southern  Bid,  by  the  Board  of  Sinking  Fund  Trus- 
tees— The  People  Will  Cast  the  Deciding  Vote — 
Terms  of  the  Proposition,  and  What  They  Mean. 


The  Sinking  Fund  Trustees,  at  a meeting  held  yester- 
day morning,  approved  the  bid  submitted  to  them  for  the 
purchase  of  the  Cincinnati  Southern  Road  by  the  Southern 
Railway  and  the  Cincinnati,  Hamilton  and  Dayton  in- 
terest. The  bid,  as  submitted,  is  signed  by  First  Vice- 
President  Andrews,  of  the  Southern  Railway  Company,  and 
Henry  A.  Taylor,  the  largest  individual  stockholder  of  the 
Cincinnati,  Hamilton  and  Dayton  Road.  As  the  gentle- 
men state,  if  they  get  the  property,  they  expect  to  turn  it 
over  to  a new  company  that  is  to  be  organized,  there  is 
little  doubt  but,  if  the  property  is  sold,  the  Southern  Rail- 
road will  turn  up  as  the  final  and  sole  owner  of  it. 


THE  BID. 


To  the  Trustees  of  the  Sinking  Fund  of  the  City  of 
of  Cincinnati:  We,  the  undersigned,  offer  to  buy  the  line 
of  railway  of  the  Cincinnati  Southern  Railway,  subject  to 
the  rights  of  the  present  lessees  therein,  at  the  price  and 
upon  the  terms  of  payment  following,  to- wit: 

1.  To  pay  in  gold  coin  $19,000,000  on  the  1st  day 
of  October,  1996,  at  the  rate  of  4 per  cent  per  annum,  pay- 


67 


ble  semi-annually  ; such  payment  to  be  secured  to  the 
atisfaction  of  your  board  by  a first  mortgage  lien  upon  the 
aid  line  of  railway  and  upon  the  equipment  of  the  Cincin- 
nati, New  Orleans  and  Texas  Pacific  Railway  Company; 
the  mortgage  to  provide  that  the  principal  shall  become 
due  and  payable  in  case,  at  any  time,  the  interest  shall 
remain  unpaid  for  90  days. 

2.  To  pay  in  cash  $1,440,000  in  quarter-yearly  in- 
stallments of  $60,000  each,  beginning  October  1,  1896. 

3.  To  pay  in  cash  a sum  equal  to  10  per  cent  of  the 
annual  gross  earnings  of  said  line  of  $4,500,000  from  and 
after  October  1,  1902. 

4.  To  pay  the  rental  falling  due  after  October  1, 1902, 
upon  the  following  leaseholds,  amounting  to  $5,808  per 
annum:  From  Sarah  B.  McLean  to  the  City  of  Cincinnati, 
recorded  in  Lease  Book  62,  page  21,  and  Lorn  Francis  T. 
White’s  assignors  to  the  City  of  Cincinnati,  recorded  in 
Lease  Book  62,  page  16,  of  the  Records  of  Hamilton 
County. 

Wb  agree  also — 

5.  That  the  general  offices  of  the  said  line  of  railway 
shall  be  maintained  in  the  city  of  Cincinnati. 

6.  To  indemnify  and  hold  the  city  of  Cincinnati  harm- 
less against  all  claims  of  the  Cincinnati,  New  Orleans  and 
Texas  Pacific  Railroad  Company  for  damages  on  account 
of  alleged  breach  of  any  of  the  conditions  or  covenants  of 
the  present  lease  of  the  city  to  that  company. 

7.  In  each  and  every  year  for  eight  years  after  the 
delivery  of  the  deed  hereunder  to  expend  not  less  than 
$250,000  in  betterments,  including  bridge  renewals,  upon 
said  line  of  railway,  to  be  covered  by  the  said  mortgage. 

8.  To  secure  the  payment  of  said  $1,440,000  and  the 
said  expenditure  of  $250,000  per  annum  for  eight  years  for 
betterments  by  the  deposit  of  $2,000,000  in  bonds  satis- 
factory to  your  board,  which  bonds  shall  be  returned  to  us 
in  proportion  to  payments  as  made  from  time  to  time. 

The  deed  shall  be  delivered  on  October  1,  1896,  and 
the  sale,  whenever  consumated,  shall  date  as  of  that  day; 
the  rents  to  be  payable  to  the  city  up  to  that  day  under 
the  present  lease. 


68 


This  offer  is  made  by  us  individually,  but  with  the  in- 
tention of  transferring  our  interests  to  a corporation  to  be 
organized  under  the  laws  of  one  or  more  of  the  states  of 
Ohio,  Kentucky  and  Tennessee  for  the  purpose  of  operating 
said  line  of  railway,  and  when  such  corporation  shall  have 
been  organized  to  your  satisfaction,  it  is  our  intention  to 
transfer  to  it  all  other  rights  under  this  offer  or  its  accept- 
ance ; whereupon  our  individual  rights,  interests  and  lia- 
bilities under  this  offer  or  its  acceptance,  and  the  contracts 
in  pursuance  thereof,  shall  vest  in  and  rest  upon  the  said 
corporation  alone.  A.  B.  ANDREWS, 

HENRY  A.  TAYLOR. 

Cincinnati,  June  13,  1896. 


WHAT  IT  MEANS. 


The  proposition  made  to  the  Sinking  Fund  Trustees, 
and  which  the  tax-payers  will  be  asked  to  either  accept  or 
reject  by  their  votes  at  a special  election  to  be  ordered  by 
Mayor  Caldwell,  is,  in  a nutshell,  as  follows:  The  pur- 
chasers propose  to  issue  $19,000,000  of  4 per  cent,  gold 
bonds,  dated  October  1,  next,  and  payable  in  100  years. 
These  bonds  are  to  be  turned  over  to  the  Sinking  Fund 
Trustees,  and  are  to  be  secured  by  a mortgage  on  the  city’s 
property,  the  Cincinnati  Southern  Road. 

This  mortgage  will,  of  course,  be  a second  mortgage, 
and  will  necessarily  remain  such  until  after  the  original 
810,000.000  of  bonds,  issued  for  Southern  Railway  pur- 
poses are  retired,  as  those  bonds  are  secured  by  a first 
mortgage  on  the  property. 

Before  the  $19,000,000  of  gold  4 per  cents  issued  by 
the  purchasers  are  turned  over  to  the  city  a deed  is  to  be 
given  the  purchasers  for  the  Southern  Railway,  which  will 
enable  the  purchasers  to  give  the  city  back  a second  mort- 
gage on  the  road,  securing  the  issue  of  $19,000,000  of 
bonds. 

These  bonds  are  not  to  be  floated,  but  are  to  be  held 
by  the  Sinking  Fund  Trustees.  In  a hundred  years,  or 


69 


when  the  bonds  fall  due,  the  purchasers  can  take  up  the 
bonds  by  paying  the  City  of  Cincinnati  the  $19,000,000  in 
gold,  and  they  will  then  own  the  railroad  absolutely.  In 
the  meantime  they  will  pay  over  to  the  Sinking  Fund  Com- 
missioners every  six  months,  dating  from  October  1,  next, 
the  interest  on  the  bonds,  being  in  amount  $380,000,  or 
$760,000  annually. 

In  addition  to  this  amount  the  purchasers  agree  to 
pay  the  city  in  cash  every  three  months  from  October  1 
next  until  October  1,  1902,  $60,000,  or  a total  sum  of 
$1,440,000  in  the  six  years.  Under  the  terms  of  the  pres- 
ent lease  the  rental  the  lessee  company  would  have  to  pay 
for  the  five  years  dating  from  October  1 next,  would  be 
$1,090,000  a year,  or,  for  the  five  years,  $5,450,000 

Under  the  offer  of  purchase  made  they  would  pay  the 
interest  on  the  $19,000,000  of  bonds,  amounting  to 
$760,000  annually,  or  $3,800,000  for  the  five  years  ending 
October  1,  1901,  and  besides  $240,000  in  cash  annually, 
or,  $1,200,000  for  the  five  years  ending  October  1,  1901, 
making,  in  all,  a total  of  $5,000,000  to  be  paid  by  the 
purchasers  to  the  city  for  the  use  of  the  property  from  Oc- 
tober 1,  next  until  October  1,  1901,  whereas,  under  the 
present  lease,  they  would  have  to  pay,  for  the  same  term  of 
years,  $5,450,500. 

Thus,  it  can  readily  be  seen  that  the  profit  accruing 
to  the  present  lessee  company  under  the  purchase  act  from 
October  1,  next,  up  to  October  1, 1901,  will  be  $450,000. 

For  the  next  term  of  five  years,  which  is  the  last  five 
years  of  the  twenty-five-year  lease  made  with  the  present 
lessee  company  by  the  city,  the  rents  under  the  agreement 
would  be  $1,250,000  a year,  or  a total  of  $6,250,000  for 
the  five  years  ending  October  1,1906.  upon  which  date  the 
present  lease  expires.  Under  the  purchase  agreement  the 
purchaser  would  pay  annually  for  this  last  term  of  five 
years  $760,000  a year,  or  a total  of  $3,800,000,  to  which 
is  to  be  added  the  $240,000,  which,  under  the  agreement, 
is  to  be  paid  during  the  year  ending  October  1,  1902. 

Thus,  for  the  last  five  years  of  the  present  lease  the 
city  would  receive  from  the  purchasers  $4’, 04  0,000;  and, 
under  the  terms  of  the  present  lease,  they  would  have  re- 


70 


ceived  $6,250,000 ; or,  in  other  words,  the  purchaser  would 
save,  during  the  last  five  years  of  the  lease,  $2,210,000. 

The  total  saving  effected  from  October  1,  next,  up  to 
October  1,  1906  by  virtue  of  the  new  agreement  would  be 
to  the  purchasers  $2,660,000  for  the  ten  years  the  present 
lease  has  yet  to  run. 

The  deal,  if  carried  through,  will  require  the  purchasers 
to  pay  for  the  property,  for  the  six  years  from  October  1, 
next,  annually  $1,000,000,  and  for  the  94  years  remaining 
of  the  term,  or,  until  the  purchasers  can  fully  exercise  the 
privileges  of  purchase,  $760,000  a year,  with  the  addition 
of  the  payment  of  $5,808  a year  from  1902  on  leasehold 
of  property  used  for  terminal  facilities,  which  they  agree 
to  assume. 


From  the  Cincinnati  Volksblatt,  Monday,  June  15,  1896. 

After  looking  through  the  offer  to  the  Sinking  Fund 
Trustees  in  regard  to  the  Southern  road,  as  contained  in 
our  Sunday  paper,  the  reader  was  perhaps  surprised  that 
only  one  offer  was  brought  to  the  public  notice.  The  rea- 
son for  this  was  that  only  one  offer  was  received,  and  that 
the  competition  was  not  greater  is  easily  explained.  The 
present  time  is  the  worst  imaginable  for  the  sale  of  rail- 
roads. At  present,  when  over  half  of  the  railroads  of  the 
country  are  bankrupt,  there  is  naturally  no  inclination  to 
invest  money  in  such  enterprises.  The  conclusion  is  con- 
sequently justified  that  if  we  wait  with  the  sale  of  the 
Southern  road  until  business  picks  up,  until  there  is  gen- 
erally an  inclination  to  seek  such  investments  for  capital, 
we  can  obtain  better  terms  than  the  present  one,  upon 
which  the  people  of  Cincinnati  will  have  to  vote.  There  is 
no  need  for  any  great  haste,  as  the  city  is  better  off  under 
the  present  contract  than  under  the  new  one,  and  the  road 
only  increases  in  value  with  time. 

Mr.  Emery,  one  of  the  largest  property  owners  and 
taxpayers  of  the  city,  expresses  his  reasons  against  the 
sale  of  the  road  under  the  present  offer,  in  the  Enquirer 


about  as  follows : The  company  which  desires  to  buy  the 
road  does  not  bid  as  much  as  the  city  is  now  receiving  and 
he  does  not  see  why  the  city  should  give  up  a good  con- 
tract, such  as  it  now  has,  to  accept  a worse  one  in  place 
of  it.  After  1902,  the  city  would  receive  under  the  pres- 
ent contract  a rent  of  one  and  a quarter  million  dollars, 
while  the  bidders  want  to  give  only  $760,000.  True, 
they  offer  to  pay  also  10  per  cent,  of  the  gross  earnings 
above  $4,500,000,  but  Mr.  Emery  thinks  that  this  is  some- 
what doubtful.  No  one  can  know  what  the  gross  earnings 
will  amount  to  more  than  the  above-mentioned  sum,  and  in 
that  case  the  city  would  receive  nothing  but  the  rent  of 
$760,000.  Until  1902  the  city  would  receive  less  for  rent 
than  it  now  receives,  and  he  is  unable  to  see  that  this  would 
be  advantageous  to  the  citizens.  The  promise  to  indem- 
nify the  citv  against  the  claims  for  damages  which  the 
Southern  Railroad  company  demands  for  not  furnishing 
terminal  facilities  is  perfectly  worthless,  inasmuch  as  this 
matter  has  already  been  decided  in  favor  of  the  city.  The 
promise  to  expend  yearly  $250,000  in  the  improvement  of 
the  road  is  likewise  no  inducement,  as  any  owner  of  the 
road  would  expend  an  equal  amount  for  improving  it.  Be  - 
sides, Mr.  Emery  thinks  it  is  objectionable  that  the  road 
should  be  transferred  to  a corporation  chartered  under  the 
laws  of  Kentucky,  which  exempt  the  stockholders  from 
personal  liability. 

These  are  some  of  the  objections  to  the  proposed  sale. 
In  the  next  few  days  we  shall  embrace  the  opportunity  to 
speak  farther  in  regard  to  the  pro  and  con  of  this  project. 


Cincinnati  Enquirer,  June  29th,  1896. 

SALE. 

Of  The  Southern  Road — The  Pending  Proposition  Dis- 
cussed by  Mr.  Thomas  J.  Emery — Mr.  Emery’s 
Argument. 

The  argument  made  by  Mr.  Emery  opposing  the  ac- 
ceptance of  the  proposition  is  as  follows: 

About  15  years  of  the  lease  for  25  years  of  the  Sou- 
thern Road  have  expired.  During  all  this  time  the  city  has 
received  the  agreed  rent,  which  was  not,  however,  sufficient 
to  meet  the  interest  on  the  bonds  given  for  the  construc- 
tion of  the  road.  The  deficit  that  has  annually  occurred 
has  been  met  by  excessive  taxation.  Next  October  will 
commence  the  third  period  of  five  years,  when  the  lease 
will  call  for  $1,090,000  a year.  From  this  date  the  load 
will  be  easy.  Five  years  afterward  the  last  period  of  five 
years  will  commence,  during  which  time  the  lessees  will 
pay  $1,250,000.  a year,  a sum  more  than  sufficient  to  pay 
the  interest  on  the  bonds,  in  view  of  their  diminution  by 
reason  of  the  operations  of  the  sinking  fund. 

The  building  of  the  Southern  Road  by  the  city  of  Cin- 
cinnati has  been  the  pet  project  by  many  of  her  citizens. 
It  has  been  said  that  its ' income  would  be  so  great  as  to 
cover  the  interest  on  all  the  city  bonds  issued  for  all  pur- 
poses, and  that  taxation  which  has  been  so  crushing  to  her 
citizens  the  past  15  years,  would  be  so  lessened  at  the  end 
of  the  lease  as  to  insure  a large  increase  of  population. 

An  act  of  the  Ohio  Legislature  of  March  6,  1889,  auth- 
orized the  Trustees  of  the  road  with  the  approval  of  a major- 
ity of  the  Trustees  of  the  Sinking  fund  to  extend  the  lease, 
it  would  appear  at  a rental  of  not  less  than  $1,250,000  per 
annum  from  the  termination  of  the  present  lease,  October  12, 
1906,  provided  such  extension  should  be  made  within  three 
years  from  the  passage  of  the  act.  This  matter  was  brought 
up  before  the  Chamber  of  Commerce  and  fully  discussed. 
One  million  two  hundred  and  fifty  thousand  dollars  was 
fixed  by  said  Chamber  as  a proper  sum  for  the  extension 
of  the  lease. 


73 


A few  years  ago  a bill  empowering  the  Sinking  Fund 
Trustees  to  sell  the  road  was  pushed  through  the  Ohio 
Legislature  without  debate.  Its  passage  was  known  to 
but  few  people.  To  the  astonishment  of  all  good  citizens 
the  daily  papers  have  lately  informed  the  public  that  the 
sinking  fund  Trustees  have,  acting  under  this  authority, 
disposed  of  the  road  from  which  so  much  was  expected. 
One  would  suppose  that  in  a transaction  of  such  impor- 
tance leading  citizens  would  have  been  consulted ; certain- 
ly that  the  Trustees  of  the  Southern  Road  would  have 
knowledge  of  the  deal. 

HASTE  IN  THE  COURTS. 

The  undue  haste  in  which  the  Courts  of  Hamilton 
County  have  been  appealed  to  in  a friendly  suit  to  test  the 
validity  of  the  deal,  and  the  powerful  influence  that  has 
induced  the  Supreme  Court  at  Columbus  to  give  an  immed- 
iate hearing  to  a case  not  opposed  by  any  real  opponents 
of  the  deal,  have  justly  caused  good  people  to  wonder  and 
to  think.  Fortunately  the  Legislature  did  not  give  to  our 
worthy  Trustees  the  power  to  bind  us  hand  and  foot  with- 
out protest.  The  deal  must  be  ratified  by  the  citizens, 'and 
it  is  to  the  citizens  that  this  explanatory  paper  must  ap- 
peal. The  ordinary  trader  can  hardly  understand  the  terms 
of  this  transaction.  The  figures  amounting  to  millions  are 
not  comprehended  by  every  one.  It  will  be  the  writer’s 
endeavor  to  explain  the  terms  so  that  everybody  will  un- 
derstand. 

The  present  cost  of  the  Southern  Road,  adding  the  in- 
terest paid  on  the  bonds  and  deducting  the  rent  received, 
up  to  December,  1895,.  is  $30,125,137,  official  figures 
of  nineteenth  report  of  the  Board  of  Sinking  Fund.  The 
deal,  if  consummated,  dates  from  October  next.  The  cal- 
culation therefore  will  be  from  that  date.  Stripped  of  all 
tinsel,  the  terms  are  as  follows : 


74 


Lessees  are  to  pay  for  five  years,  commencing 

October,  1896,  $1,090,000  a year,  or $ 5,450,000 

For  the  last  term  of  five  years  $1 250,000, 

or  : 6,250,000 


Inthe  ten  years  of  lease $11,700,000 

The  new  deal  propose  five  years  at  $1,000,000 

or. $5,000,000 

Five  years  at  $760, 000 3,800,000— $8,800,000 

Loss  by  accepting  the  offer $2,900,000 

Thereafter  simply  $760,000  a year,  with  10  per  cent 
on  gross  income  over  $4,500,000.  This  large  deficiency 
must  be  made  good  by  increased  taxation.  How  can  real 
estate,  with  its  low  rents  and  empty  houses,  stand  any  in- 
creased burden?  Many  persons  wishing  to  escape,  are 
trying  to  sell  their  property,  but  there  are  few,  if  any  buy- 
ers. If  this  sacrifice  were  to  be  followed  by  large  profits, 
as  were  hoped  for,  the  loss  might  be  borne  for  the  good 
that  is  to  come,  but  when  we  are  confronted  with  a reduc- 
tion of  rent  from  $1,250,000  to  $700,000  for  generations 
to  come  we  are  astounded  and  dismayed. 

For  this  costly  and  valuable  road  we  are  offered  $19, 
000,000,  payable  in  100  years.  It  is  stated  that  the  real 
purchasers  are  the  present  lessees. 

The  gentlemen  who  have  conducted  this  deal  ^re  as 
able  men  as  New  York  produces.  Mr.  Spencer,  President 
of  the  Southern  Railway,  lately  read  a paper  before  the  Com- 
mercial Club  advocating  this  deal.  Not  satisfied  with  this, 
the  paper  has  been  reproduced  in  the  Times. 

Saved  from  the  stipulated  dues  of  the  city  is  the  enor- 
mous sum  of  $2,900,000.  Then  commences  the  rental  of 
$760,000.  This  sum,  $2,900,000,  placed  at  interest  for 
one  hundred  years  at  three  per  cent,  with  interest  added 
yearly,  amounts  to  $52,200,000.  If  the  calculation  be  made 
at  4 per  cent,  the  rate  the  city  now  pays,  it  will  amount  to 
$139,200,000.  This  is  the  city’s  money,  and  from  it  it  is 
proposed  to  pay  the  paltry  sum  of  $19,000,000.  Thus  it 
appears  thau  with  part  of  the  money  made  by  reduction  of 
rent  for  the  ten  years  still  remaining  the  able  financiers 
propose  to  pav  for  the  road. 

75 


WHAT  WILL  THE  CITY  GET  ? 


When  Esau  sold  his  birthright  for  a mess  of  pottage  he 
received  something,  but  when  the  present  generation  of  the 
city  of  Cincinnati  shall  sell  their  inheritance  for  $19,000,- 
000  in  one  hundred  years  they  will  receive  absolutely  noth- 
ing. Is  this  the  deal  that  the  citizens  are  asked  hurriedly 
to  sanction? 

In  justification  of  this  ridiculous  trade  one  of  our  rep- 
utable Trustees  has  stated  that  if  this  proposition  be  not 
accepted  the  road  will  default  on  her  rent  next  fall.  What 
of  that  ? It  is  not  a case  in  which  a tenant  has  possession 
of  the  property  and  refuses  to  vacate  and  will  not  pay  rent. 
The  road  is  in  the  hands  of  a receiver,  acting  under  the  or- 
ders of  the  court.  The  city  is  sure  to  receive  the  net  re- 
turns. Below  is  an  official  statement  of  the  net  and  gross 
earnings  for  14  years: 

Year  ending  December  31 — 


Gross  Earnings. 

Expenses. 

Net  Earnings. 

1882 

$2,570,057 

08 

$1,653,004 

18 

$ 917,052 

90 

1883 

2,596,191 

21 

1,800,168 

03 

796,023 

20 

1884 

2,658,184 

58 

1,836,974 

43 

821,210 

15 

1885 

2,681,546 

88 

1,710.535 

40 

971,011 

48 

18*6 

2,882,171 

76 

1,833,579 

40 

1,048,592 

36 

1887 

3,377,551 

86 

2,116,786 

35 

1,260,765 

51 

1888 

3,624,490 

13 

2,500,195 

18 

1,124,294 

95 

1889 

3,655,859 

10 

2,510,602 

59 

1,145,256 

51 

1890 

4,309,144 

15 

2,728,1 8 L 

49 

1,580,962 

66 

1891 

4,379,142 

64 

3,024,502 

42 

1,354,640 

22 

1892 

4,337,497 

56 

3,199,809 

61 

1,137,687 

95 

1893  .... 

4,174,969 

71 

3,176,254 

55 

998,715 

16 

1894 

3,576,979 

47 

2,665,215 

35 

911,764 

12 

1895 

3,487,941 

65 

2,511,174 

68 

976,766 

97 

It  will  be  seen  that  the  average  net  earnings  have 
been  for  fourteen  years  $1,074,624.58. 

Is  it  not  reasonable  to  suppose  that  with  the  road  in 
good  condition,  the  tunnels  mostly  arched,  with  abundance 
of  rolling  stock,  the  road  will  earn  more  the  next  fourteen 
years  than  it  did  during  the  past  like  period?  If  the  lease 
be  thrown  up  the  city  will  have  the  rolling  stock  and  the 
betterments  for  its  security,  with  a good  assurance  of  a 
larger  net  profit  than  during  the  lease.  It  will  be  seen  that 
the  gross  earnings  have  averaged  $3,450,837,  and  that  the 
greatest  year  was  1891,  $4,379, 142.64.  Thus  the  ten  per 
cent  on  the  surplus  over  $4,500,000  of  the  gross  earnings, 
which  the  lessees  offer  as  a sort  of  make-weight,  is  not  like- 
ly during  the  present  generation  to  amount  to  anything. 

THOMAS  J.  EMERY. 


76 


From  the  Cincinnati  Euquirer,  May  4,  1896. 

ON  TOP  IS  THE  CITY’S  RAILROAD. 

The  Rental  Provides  For  Interest  Charges. 

It  reems  strange  that  of  all  the  business  men,  railroad 
men  and  financiers  who  have  addressed  the  various  commer- 
cial and  other  bodies  here  on  the  subject  of  the  Cincnnati 
Southern  Railroad,  none  of  them  have  told  the  people  in 
what  a very  admirable  position  the  city  is,  so  far  as  that 
property  is  concerned.  It  remains  for  the  Enquirer  to  an- 
nounce to  the  railroad  fraternity  and  the  taxpayers  of  Cin- 
cinnati in  particular,  that  the  rental  received  from  the  prop- 
erty at  the  present  time  lacks  but  $38,127  oi  being  enough 
to  pay  the  interest  on  the  Cincinnati  Southern  bonds  out- 
standing. Next  October  the  rental  the  city  receives  in- 
creases $90,000  per  annum,  and  then  for  the  first  time  since 
the  road  was  built  the  city  will  have  a surplus  from  the 
property.  The  article  in  another  column  of  to-day’s  En- 
quirer explains  fully  all  particulars  about  the  city’s  debt 
on  account  of  the  Southern  Road,  and  shows  conclusively 
that  it  is  not  necessary  to  longer  tax  the  people  to  raise 
money  to  pay  the  interest  on  the  Southern  bonds.  Within 
the  next  six  years  over  $7,000,000  in  bonds  drawing  7.3 
per  cent  interest  fall  due,  and  can  be  refunded  into  four  per 
cents  before  that  time.  From  that  time  on  it  will  not  be 
necessary  to  even  tax  the  people  for  a sinking  fund  to 
provide  money  with  which  to  retire  the  bonds,  as  with  the 
refunding  of  this  batch  of  bonds  alone  the  annual  interest 
charges  on  Southern  Railroad  bonds  will  have  decreased  in' 
the  neighborhood  of  $250,000,  and  the  property  will  earn 
its  own  sinking  fnnd.  The  citizens  have  paid  up  their  tax 
assessments,  aggregating  now  nearly  $12,000,000,  without 
a murmur,  but  the  time  of  their  reward  is  at  hand.  Said 
a well-known  gentleman  to  the  Enquirer  representative  a 
few  days  ago : “There  is  no  reason  whv  the  present  gene- 
ration should  pay  off  the  debt  incurred  by  the  city  in 
building  and  holding  the  Southern  Road,  and  leave  it  to  the 
coming  generation  perfectly  clear  of  all  incumbrances.” 
He  added : “That  property  will  clear  itself  of  debt  when 
bonds  drawing  a reasonable  rate  of  interest  replace  the  pres- 
ent high  rate  bonds,  and  the  property  is  given  a chance.” 

77 


From  the  Commercial  Tribune,  June  27,  1896. 

THE  SOUTHERN  ROAD. 


To  Sell  or  Not  to  Sell’s  the  Question — Mr.  E.  C.  Goshorn, 
of  the  Manufacturer’s  Club,  Gives  an  Opinion. 

The  contemplated  sale  of  the  Cincinnati  Southern 
Railway  is  beginning  to  interest  the  business  men  of  the 
city  more  than  it  has  during  the  negotiations.  The  bid 
and  the  lease  are  undergoing  examination,  and  there  is 
quite  a diversity  of  opinion  as  to  whether  the  road  should 
be  sold.  Friday  a Commercial  Tribune  reporter  had  an 
interesting  talk  with  Mr.  E.  C.  Goshorn,  President  of  the 
National  Lead  Company  and  member  of  the  Manufactur- 
ers’ Club.  He  said  : 

“ The  question  of  selling  the  Southern  Road,  pro  and 
con,  is  ably  dealt  with  in  your  columns  Wednesday  and 
Friday.  The  importance  of  the  question  is  not  overstated. 
In  vitality  to  Cincinnati  tax-payers  it  overshadows  all  other 
issues,  and  it  should  be  dealt  with  most  carefully  upon  the 
fullest  information  as  to  facts 

“ In  summing  up  the  matter  the  Commercial  Tribune 
seems  to  accord  to  the  insolvency  of  the  present  lessee 
company  the  position  of  a controlling  circumstance,  and 
seems  to  regard  it  as  about  the  only  reason  for  considering 
the  bid  now  before  the  public.  The  statement  of  the  facts 
in  your  debit  and  credit  column  does  not  seem  to  leave 
any  other  reason.  Hence  the  validity  of  this  reason  is  a 
very  proper  subject  to  dwell  upon. 

It  is  generally,  and  I presume  correctly,  understood 
that  the  present  leasing  company,  the  bidders  for  the  road, 
and  the  corporation  to  which  the  bidders  propose  to  turn 
over  the  property  represent  the  same  individuals  and  cor- 
porations. Hence,  insolvency  of  her  tenant  and  a men- 
aced default  in  payment  of  rent  is  urged  as  a reason  why 
the  city  should  continue  that  tenant  in  permanent  occu- 
pancy of  the  property  at  diminished  rental,  without  ad- 
ditional security.” 

“ Why  ?” 

78 


x 


44  Because  the  Court,  which  now  supervises  the  ope- 
rations of  the  tenant  and  protects  the  city’s  equities  may 
grow  weary  of  that  function.  Does  not  this  suggestion 
impute  to  the  Court  the  attributes  of  caprice  or  every- 
day human  weakness,  to  which  they  are,  by  their  very 
constitutior,  superior?  I do  not  think  it  necessary  to  bor- 
row trouble  about  the  Courts. 

44  They  will  do  what  is  lawful,  just  and  equitable  to- 
ward all  parties,  and  what  the  Courts  will  do  will  be  de- 
liberately done  in  broad  daylight,  in  the  presence  of  all 
people,  and  there  will  exist,  in  connection  with  the  Court’s 
supervision,  no  question  of  juggling  with  the  City’s  rights. 
Now,  I see  no  reason  why  the  present  status  is  any  less 
satisfactory  than  the  alternative  offered  by  the  leasing  com- 
pany, backed  by  a ‘stand  and  deliver’  sort  of  menace, 
which  practically  says  to  the  City : 4 Give  us  your  road  on 
our  terms,  or  we  may  make  it  worse  for  you.’  In  the  pres- 
ence of  a menace  of  this  charactor  no  courageous  business 
man  would  relinquish  control  of  his  property  in  exchange 
for  a naked  promise  offered  by  his  debtor. 

44Now,  let  us  take  a more  courageous  view  of  the 
question.  The  leasing  company  has  never  defaulted.  It  has 
strained  every  effort  to  meet  its  obligations  to  the  City, 
which  are  mere  business  obligations,  secured  by  lien  on  all 
the  property  it  possesses,  and  stimulated  by  the  supervision 
of  a righteous  Court.” 

44  But  suppose  it  should  default?” 

44  Then,  instead  of  a Receiver  selected  by  the  company 
itself,  the  City  may  demand  a Receiver  under  the  super- 
vision of  the  same  Court,  who  may  or  may  not  be  the  same 
gentleman  who  now  so  ably  performs  the  duties  of  that 
responsible  position. 

But,  after  all,  it  is  not  the  Receiver  so  much  as  the 
Court  upon  which  we  would  rely.  The  result  of  proceed- 
ings under  default  would  practically  be  a very  prompt  elim- 
ination of  the  present  leasing  company  from  the  situation, 
and  the  City  would  thereby  practically  be  relieved  from  the 
menace  of  default  and  bankruptcy  which  is  now  paraded 
to  disgust  the  people  with  their  road,  and  bring  them  to  a 
state  of  mind  which  will  prompt  them  to  vote  it  away.” 


79 


“ Suppose,  urder  control  of  the  Court,  these  present 
lessees  are  eliminated,  and,  under  control  of  the  Court,  the 
road  itself  be  offered  for  sale  in  the  open  market,  is  it  not 
more  than  certain  that  a larger  annual  sum  would  be  se- 
cured by  open  competition  than  has  been  developed  by  the 
star-chamber  method  of  offering  the  road  for  sale,  which 
has  resulted  in  the  present  bid  ? 

u Let  us  have  a little  courage.  Let  us  avoid  crossing 
bridges  before  we  come  to  them,  and,  in  the  matter  off 
disposing  of  the  Southern  road,  act  deliberately.  The 
weight  of  opinions  which  have  appeared  in  the  Commercial 
Tribune  and  in  other  papers,  emanating  from  practical 
business  men,  are  decidedly  against  the  validity  of  the 
present  bid  as  an  actual  sale. 

“ The  fact  that  the  consideration  received  by  the  City 
will  require  the  City’s  indorsement  in  order  to  make  if 
available  to  relieve  the  City’s  credit,  is,  in  itself,  a quasi 
lending  of  the  City’s  credit  to  a coipo  ation,  which  is 
unconstitutional  and  unlawful. 

“ I have  no  hesitancy  in  saying  that  the  present  bid 
should  be  voted  down,  nor,  as  a tax-payer,  have  I any 
hesitancy  in  meeting  any  results  which  may  grow  out  of 
intelligent  business  methods. 


Cincinnati  Enquirer,  July  1st,  189b. 

OPPOSES. 


The  Sale  of  Southern — Mr.  James  E.  Mooney  Before  the 
Optimists’  Club — Talks  Pointedly  on  the  Subject — 
Citizens  Ask  for  Postponement  of  Election. 

At  the  meeting  of  the  Optimists’  Club  last  Saturday, 
Mr.  Jamc  s E.  Mooney,  among  others,  made  reference  to 
the  proposed  sale  of  the  Cincinnati  Southern.  The  opin- 
ions expressed  by  Mr.  Mooney  attracted  no  little  attention, 
and  were  the  subject  of  some  favorable  comment  among  the 
business  men  who  heard  them.  Being  interviewed  on  the 
subject  last  evening  by  a representative  of  the  “Enquirer,” 
Mr.  Mooney  spoke  of  the  proposition  received  as  follows: 

80 


MR.  MOONEY’S  REMARKS. 

“I  do  not  approve  the  contract  negotiated  by  the  Sink- 
ing Fund  Trustees  for  the  sale  of  the  Cincinnati  Southern 
Railroad  to  Messrs.  Taylor  and  Andrews.  Negotiations  of 
this  nature,  more  than  10  years  before  the  expiration  of  a 
satisfactory  and  well  secured  lease,  on  which  there  has 
been  no  default  of  any  kind,  are,  to  say  the  least,  in  my 
judgment,  premature.  These  contracting  parties  are 
without  legal  authority  to  own  or  to  operate  the  property, 
and  should  the  contract  be  confirmed  by  the  votes  of  the 
people,  it  simply  binds  the  city  to  the  option  of  purchase 
by  these  gentlemen,  which  they  may  or  may  not  exercise, 
they  first  having  to  dispose  of  it  to  others  having  the  re- 
quisite legal  authority,  making  a record  for  the  city  much 
to  its  injury  in  future  transactions  should , they  for  any 
cause  fail  of  completion.  These  objections,  or  rather  sugges- 
tions, aside,  I disapprove  of  it  for  the  reason  it  reduces  the 
security  for  the  faithful  performance  of  the  conditions  of 
the  existing  lease. 

AS  WELL  AS  THE  RENTAL. 

And  at  the  same  time  it  continues  the  connection  of  the 
city  in  a more  objectionable  form  for  100  years,  with  this 
commercial  enterprise  which  it  evidently  is  the  intention 
of  the  law  authorizing  the  action  of  the  Sinking  Fund 
Trustees,  to  speedily  terminate. 

“The  Trustees  have  discharged  a duty  in  responding 
to  the  demands  of  some  taxpayers  and  citizens  by  consid- 
ing  and  submitting  to  their  principals  the  voters  of  the  city 
for  their  approval  or  disapproval  of  the  best  and  only  bid 
received.  It  is  to  be  regretted  that  it  was  not  generally 
understood  that  bids  of  private  parties  would  be  considered, 
as  there  might  have  been  others.” 


81 


POSTPONEMENT. 


Of  Southern  Railroad  Sale  Election  Requested  by  Promi- 
nent Citizens. 


A petition  was  circulated  on  Change  and  among  the 
business  men  yesterday  requesting  the  Sinking  Fund  Trus- 
tees to  postpone  arrangements  for  the  special  election  for 
the  Southern  Railroad  question.  The  petition  obtained  a 
large  number  of  signatures,  and  will  be  still  further  circu- 
lated to-day,  after  which  it  will  be  presented  to  the  Sink- 
ing Fund  Trustees. 

The  petition  is  as  follows: 

“To  the  Board  of  Sinking  Fund  Trustees  of  the  City 
of  Cincinnati — Gentlemen : The  undersigned,  taxpayers  of 
the  City  of  Cincinnati,  respectfully  request  that  the  adver- 
tisement of  the  proposition  of  Messrs.  Andrews  and  Taylor 
for  the  purchase  of  the  Cincinnati  Southern  Railway,  be 
postponed  until  such  a date  in  September  next,  so  that  the 
election  to  be  held  under  the  act  of  March  12,  1887,.  au- 
thorizing the  sale,  shall  take  place  at  some  early  day  in  the 
month  of  October. 

“The  undersigned  base  this  request  upon  two  grounds. 

“1.  That  the  election  held  at  an  earlier  date,  espec- 
ially in  August  or  September,  will  deprive  a large  number 
of  those  deeply  interested  of  the  privilege  of  voting,  as  they 
will  be  absent  from  the  city  during  these  months. 

“2.  Too  short  a time  has  elapsed  since  the  decision 
of  the  Supreme  Court  that  the  road  can  be  sold  under  the 
above  named  act  to  allow  of  that  full,  fair,  impartial  and 
intelligent  discussion,  and  the  consideration  of  the  question 
of  the  sale  upon  the  terms  proposed  which  the  importance 
of  the  subject  requires.” 

Below  are  the  names  secured: 


Thomas  J.  Emery, 
Louis  Seasongood, 
W.  A.  Goodman, 
James  Mooney, 
Early  & Daniel, 


John  W.  Herron, 
James  Espy, 

Geo.  H.  Bohrer, 

B.  S.  Cunningham, 
Geo  Guckenberger, 


82 


Knaul  & Holt, 

J.  H.  Hermesch  & Co. 

C.  Klein  Flour  and  Feed  Co. 
Henry  W.  Hamann, 

G.  P.  Altenberg, 

Collins  & Co. 

Whitcomb  & Root, 

Sol.  P.  Kineon, 

Chas.  S.  Fisher, 

J.  W.  Fisher  & Co. 

Maguire  & Co. 

Gale  Brothers, 

H.  Wagner, 

F.  M.  Huschart, 

J.  Y.  Maescher, 

J.  W.  Wilshire, 

Geo.  P.  Ireland, 

'Jerry  Kiersted, 

Henry  Immenhorst, 

Wm.  Marmet, 

Elias  Block  & Sons, 

Frank  J.  Jones, 

L.  B.  Harrison, 

M.  M.  White, 

H.  C.  Yergason, 


W.  S.  Groesbeck, 

John  H.  Allen, 

Adam  Smyrl, 

S.  R.  Yoorhees  & Co. 

A.  G.  Wood  & Co. 

Moore  & Garner, 

Stewart,  Dunholter  & Co. 
Chas.  H.  Jacob, 

John  Woesten, 

P.  R.  Budd, 

Stephen  S.  Boyle, 
Putnam,  Hooker  & Co. 
National  Lead  Co. 

Jas.  Morrison  & Co. 
Cincinnati  Abattoir  Co. 
A.  Sander  Packing  Co. 
Wm.  Maescher, 

Samuel  Baily,  Jr. 

Wm.  McCallister, 

E F.  Fuller, 

G.  H.  Schatzman, 

Wm.  Y.  Ebersole, 

John  W.  Harper, 

C.  B.  Burldiam. 


A copy  of  the  petition  was  taken  in  hand  by  Col.  John 
W.  Harper,  and  the  signatures  secured  by  him  among  the 
business  men  amounted  to  45  in  the  space  of  an  hour,  the 
Colonel  being  met  with  but  two  refusals.  The  additional 
names  secured  by  him  are  as  follows : 


J.  C.  Hussey, 

Ormstein  & Rice, 

Alex.  Offner, 

J.  &.  S.  Bing, 

Jacob  Scheurer, 
Heidelbach,  Friedlander  & 
Company. 

L.  Mayer, 

Levy,  Price  & Co. 


Sachs  & Morrison, 

Isaac  S.  Strauss  & Co. 
Charles  Meis  & Co. 

M.  H.  Marks  & Co. 

Johnson  Bros.  Hardware  Co. 
Isaac  Hart  & Co. 

W.  S.  Dickinson  & Co. 
Charles  N.  Stix, 

Mayer  & Bros. 


83 


F.  Isaac, 

Feder,  Silberberg  & Co. 
Wm.  Stern, 

Wolfson  Brothers  & Co. 
Mendel,  Berman  & Co. 

G.  Sturm  & Sons, 
Kleine,  Klonne  & Co. 
Bowman’s  Sons, 

Wyler,  Ackeiland  & Co. 
Brown  & Co. 

Moch,  Berman  & Co. 

B.  & x\.  Haas, 

Wolf,  Stern  & Co. 


Louis  Mollenkopf. 

N.  Drucker, 

J.  Sachs,  B.  and  S.  Co. 
Meyer,  Wise  & Kaichen, 
Bloom,  Cohn  & Co. 

Louis  Stix  & Co. 

Nathan  Plaut  & Co. 
Seasongood,  Stix,  Krouse 
& Company, 

M & S Fechheimer  & Co. 
The  H.  & S.  Pogue  Co. 
The  G.  W.  McAlpin  Co. 
Abe  Bloch  & Co. 


From  the  Commercial  Tribune  July  4,  1896. 

9 

CINCINNATI  SOUTHERN. 

One  of  Its  Builders  Values  It  at  $25,000,000. — R.  G. 

Huston  is  Decidedly  Opposed  to  Accepting  the 

Present  Offer  for  the  Road. 

Cincinnati,  June  30,  1896. 

To  the  Editor  Commercial  Tribune: 

I accept  your  invitation  for  expression  of  views  re- 
garding the  sale  of  the  Cincinnati  Southern  Railway.  Hav- 
ing examined  carefully  the  terms  of  the  proposal  of  Andrews 
and  Taylor  to  the  Sinking  Fund  Trustees  of  Cincinnati  for 
the  purchase  of  the  Cincinnati  Southern  Railroad,  I am 
decidedly  of  the  opinion  that  it  would  be  unwise  to  sell 
said  railway  under  the  terms  of  that  proposition  for  $19,- 
000,000  of  bonds,  bearing  four  per  cent  per  annum,  run- 
ning one  hundred  years,  with  an  insufficient  mortgage  on 
the  road,  already  mortgaged  for  security  of  the  payment  of 
said  non-negotiable  mortgage  bonds  when  they  become 
due  after  a credit  of  one  hundred  years. 

When  the  road  was  finally  completed  in  December  of 


84 


1879  the  city  of  Cincinnati  had  paid  out  in  cash  $18,500,- 

000  for  its  construction,  and  since  then  $300,000  for  ter- 
minals, and  the  lessees  expended  in  betterments  $2,522,000 
and  terminals  $128,000,  making  a total  close  approximate 
cost  in  actual  cash  of  $21,450,000,  besides  the  interest 
on  bonds  during  all  these  years  over  and  above  the  rental. 
Our  firm,  R.  G.  Huston  & Co.,  having  completed  the  road 
from  Somerset  to  Chattanooga,  a distance  of  176  miles, 
besides  other  large  contracts  on  other  portions  of  the  road, 

1 know  the  C.  S.  Ry  is  one  of  the  best  built  railways  in  this 
country,  and  having  been  constructed  under  most  favora- 
ble conditions,  is  one  of  the  cheapest,  considering  the  ex- 
cellent character  of  the  work  performed. 

Taking  the  reports  of  the  progress  of  the  work  of  the 
engineer  as  a criterion,  it  will  be  seen  that  the  competi- 
tion was  very  great,  and  contractors  took  the  work  of  con- 
struction exceedingly  low,  on  an  average.  Earth  excava- 
tion 15  cents;  embankment  17  cents;  loose  rock 45  cents; 
solid  rock  78  cents;  tunnel  excavation  $2.85 ; stone  ballast 
for  track  85  cents  per  cubic  yard.  Common  labor  $1.25; 
mechanics,  stonecutters,  masons,  etc.,  $3.50  per  day,  which 
are  about  the  prevailing  prices  of  the  present  day.  Iron 
bridges  and  trestles  were  constructed  and  erected  at  a 
price  very  little  over  the  present.  Steel  rails  used  on  the 
line  from  Cincinnati  to  Somerset  cost  $75  per  ton;  from 
Somerset  to  Chattanooga  cost  us  at  the  mills  in  Pittsburg 
$40  per  ton. 

THE  ROAD’S  PRESENT  VALUE. 

Considering  the  unusually  heavy  and  excellent  qual- 
ity of  the  work  of  the  C.  S.  Railway,  the  said  railway  as  it 
now  stands,  in  my  opinion,  cannot  be  duplicated  or  paral- 
lelled at  the  present  time  for  less  than  22,000,000.  The 
structures  are  all  permanent,  of  stone  and  iron;  the  tun- 
nels, with  the  exception  of  one  or  two,  are  lined  with  brick 
and  stone. 

The  roadbed  is  first  class,  thoroughly  ballasted,  and 
laid  with  steel  rails.  The  equipment  is  almost  perfect  for 
running  of  trains  with  rapidity  and  safety. 


85 


A short  time  since  I traveled  over  the  road  by  day- 
light, through  27  tunnels,  aggregating  nearly  five  miles, 
over  high  iron  bridges  and  viaducts  four  and  one-half  miles, 
in  nine  (9)  hours  (being  behind  time),  from  Chattanooga, 
a distance  of  336  miles,  at  an  average  speed  of  37^  miles 
an  hour,  and  sometimes  through  tunnels  and  over  those 
very  high  iron  bridges  and  viaducts  quite  smoothly  at  the 
rate  of  fifty  miles  an  hour,  which,  with  close  observations, 
prove  to  me  that  the  C.  S.  Railway  is  in  excellent  physical 
condition,  and  ranks  as  one  of  the  best  single-track  trunk 
railways  of  the  present  day. 

In  gross  earning  capacity  it  has  more  than  come  up  to 
my  expectations.  When  myself  and  associates,  under  the 
firm  name  of  R.  G.  Huston  & Co.,  proposed  for  the  lease  in 
the  fall  of  1881,  I predicated  our  bid  for  the  first  half  term 
of  the  lease  (twelve  and  one-half  years)  on  a gross  annual 
earning  of  $10,000  per  mile.  From  reliable  data  I now 
find  that  the  road  has  been  earning  for  the  lessees  an  av- 
erage annual  gross  earning  of  about  $11,000  per  mile,  or 
$3,696,000  for  336  miles,  and  expect,  as  expressed  in  their 
proposal,  the  gross  earnings  in  the  near  future  to  exceed  $4,- 
500,000  per  annum,  or  $13,100  per  mile.  In  my  opinion,  if 
the  Trustees  of  the  railway  have  not  carried  out  their  con- 
tract according  to  the  lease,  in  furnishing  terminal  facilities, 
they  should  allow  the  lessees  what  is  right  and  just,  but  by 
all  means  they  should  insist  on  the  lessees  living  up  to 
their  contract  to  the  end. 

PRESENT  LEASE  ALL  RIGHT. 

The  present  lease  does  not  expire  until  October  11, 
1906,  and  the  renewed  commercial  activity  that  is  sure  to 
occur  during  these  coming  ten  and  a quarter  years  will 
enable  the  lessees  to  readily  fiieet  the  rental  of  $11,950,- 
000,  or  an  average  approximate  annual  rental  of  $1,167,- 
000.  But  in  case  of  failure  the  city  is  amply  secured  by 
the  terms  of  the  lease  by  a lien  on  the  entire  property  and 
rolling  stock  of  the  lessee  company.  The  lessee,  or  South- 
ern Railway  Company  has  one  powerful  competitor  in  the 
South,  the  L.  & N.  R.  R.  Co.,  who  would  be  just  as  anxious 


86 


to  secure  our  C.  S.  R.  R.  as  it  was  in  1881,  when  it  bid  for 
the  lease,  and  bid  $950,000  per  annum  for  the  last  ten 
years,  or  from  the  present  to  1906. 

I am,  for  one,  most  decidedly  in  favor  of  holding  on  to 
the  road,  and  not  sell  this  magnificent  property,  which  I 
think  is  really  worth  $25,000,000,  at  this  inopportune  time 
for  $19,000,000  four  per  cent  bonds  not  properly  secured, 
and  only  $2,000,000  cash  on  the  board  to  secure  the  sale. 

It  seems  to  me  preposterous  to  sell  the  C.  S.  Ry.  on 
the  basis  of  the  said  proposition  of  Andrews  and  Taylor,  or 
those  behind  them.  Better  vote  it  down,  and  either  reduce 
the  present  average  annual  rental  from  $1,167,000  to  $1,- 
000,000  for  the  next  ten  years,  or  till  1906,  as  a compro- 
mise, or,  in  case  the  present  lessees  throw  up  their  lease 
of  said  railway,  let  the  Trustees  of  the  road,  who  have  ad- 
ministered their  trust  faithfully  and  wisely,  ac  once  adver- 
tise extensively  for  an  ample  time  for  proposals  to  lease 
or  sell,  to  be  made  as  before,  under  a properly-drawn  set  of 
specifications.  Very  respectfully  submitted, 

R.  G.  HUSTON. 


Cincinnati  Enquirer,  July  4th,  1896. 

EFFECT 


That  would  be  had — On  Taxation  by  the  Sale  of  the 

Cincinnati  Southern — Figured  by  the  Freight  Bureau. 

At  the  last  meeting  of  the  Cincinnati  Freight  Bureau 
the  question  of  the  sale  of  the  Cincinnati  Southern  Rail- 
road was  discussed.  At  that  meeting  one  of  the  members 
asked  what  effect  upon  taxation  the  sale  of  the  road  would 
have.  The  answer  was  not  given  in  entirety  at  the  meet- 
ing and  in  consequence  yesterday  an  open  letter  was 
formulated  by  the  Executive  Committee  of  the  bureau  and 
put  in  such  a form  as  would  enable  it  to  be  sent  out  and 
used  as  conclusive  argument.  This  letter  is  as  follows : 

Dear  Sir:  At  the  meeting  of  the  Freight  Bureau  sub- 


87 


scribers  held  on  July  1,  a question  was  asked  as  to  the 
effect  upon  taxation  which  the  sale  of  the  road  as  contem- 
plated might  have. 

The  question  was  not  at  the  time  fully  or  definitely 
answered.  Possibly  from  the  following  figures  taken  from 
last  report  of  the  Sinking  Fund  Trustees,  you  can  draw 


your  own  conclusions. 

Total  debt  of  the  city  on  account  of  the  Cin- 
cinnati Southern  Railway  is  stated  to 

be $18,616,000 

This  is  represented  by  bonds  carrying  differ- 
ent rates  of  interest  amounting  in  the 

aggregate  annually  to 1,272,584 

The  present  rental  is  annually $1,000,000 


Leaving  to  be  provided  for  by  taxation  or 

otherwise  annually $ 272,584 


To  pay  this  deficit  the  duplicate  for  ’95-96  carries  an 
item  of  1.475  mills. 

In  1902,  about  six  years  hence,  the  maturing 
of  $10,000,000  7-30  bonds  will  enable 
the  Trustees  to  refund  that  portion  of 
the  debt  at  not  over  4 per  cent,  which 
will  reduce  the  amua!  interest  charge 


to  $1,272,000 

Less 330,000 


$ 942,000 

If  the  present  Tease  should  then  be  in  effect 

the  rent  will  be $1,250,000 

Which  would  enable  the  Sinking  Fund  Trus- 
tees to  stop  the  1.475  mill  taxation  and 

yield  them  an  annual  surplus  of $ 308,000 

But  if  this  offer  is  accepted  the  purchasers 

will  then  be  paying  annually  only $ 760,000 


Which  would  compel  the  Trustess  to  raise 

by  taxation  for  five  years  annually $ 182,000 

Under  the  present  lease  the  rental  for  five 

years,  from  October  1,  1896,  will  be $ 5,450,000 


88 


During  five  years  next  following 6,250,000 


Total  in  ten  years $11,700,000 

This,  as  I have  shown  above,  will  enable  the 
Sinking  Fund  after  five  years  to  discon- 
tinue taxation $ 272,000 

And  enjoy  an  annual  surplus 308,000 


Total  annual  saving $ 580,000 

Total  saving  in  five  years 2,900,000 


Total  to  credit  of  present  lease $14,600,000 

If  the  road  is  sold  the  purchasers  will  pay  in 

five  years,  from  October,  1,  1896 $ 5,000,000 

In  the  next  five  years,  at  $760,000  per  an- 
num   $ 3,800,000 

Total  in  ten  years  § 8,800,000 

During  the  last  five  years  the  city  will  have 

to  raise  by  taxation  annually $ 182,000 

Or  in  five  years ; $ 910,000 


Which,  taken  from  amount  received,  will 

leave  to  the  credit  of  the  sale $7,890,000 


Making  loss  to  the  city  in  ten  years $6,710,000 

Mr.  Emery  makes  loss  to  the  city  on  basis  of 

income  alone $ 2,900,000 

But  you  can  see  that  by  taking  into  consideration  the 
effect  which  the  sale  would  have  on  taxation  the  loss  is 
more  than  twice  as  much. 


From  the  Cincinnati  Enquirer,  May  7,  1896. 

NUMEROUS  THE  OPINIONS  EXPRESSED. 


Measures  should  be  Adopted  for  Relief  from  unnecesary 
Taxation  for  Interest  Charges  on  the  Southern  Rail- 
road Bonds. 

The  article  in  the  Enquirer  treating  of  the  handling 

89 


of  Cincinnati  Railroad  bonds  by  the  Sinking  Fund  Trustees 
created  no  little  comment  on  Change  and  on  Third  street. 
The  consensus  of  opinion  is  that  as  the  rental  received  from 
the  Southern  Road  was  so  nearly  sufficient  to  pay  the  inter- 
est charges  on  the  Cincinnati  Southern  bonds  the  people 
should  not  be  assessed  over  $250,000  yearly  in  order  to 
enable  the  Sinking  Fund  Trustees  to  make  a good  financial 
exhibit. 

As  to  what  the  outcome  will  be  if  the  matter  is  taken 
into  the  courts,  opinions  differed  to  a certain  extent.  All 
those  talked  with,  however,  didn’t  hesitate  to  sav  that  an 
unnecessary  tax  should  not  be  levied  and  collected  from  the 
people. 

One  gentleman  said  : “It  is  certainly  not  right  to  buy 
up  Southern  bonds  with  money  furnished  by  the  people, 
destroy  the  bonds  and  continue  to  collect  from  the  people 
interest  on  those  bonds,  no  matter  what  legal  right  there 
may  be  to  do  so.  For  the  matter  of  that,  even  if  the  bonds 
had  not  been  destroyed,  but  had  been  bought  up  with  the 
people’s  money,  they  should  be  retired,  and  the  burden  of 
taxation  on  the  people  reduced.  It  looks  to  me  very  much 
like  the  case  of  a man  giving  a note  for  a sum  of  money, 
scraping  around  and  raising  the  money  with  which  to  liqui- 
date. When  he  gets  the  money  he  pays  the  note,  but  the 
holder  says:  “All  right;  you  have  paid  the  principal,  but 
you  must  continue  to  pay  the  interest  on  the  note  although 
you  have  taken  it  up,  as  I want  my  interest  account  to  show 
up  large.”  I can’t  see  how  the  city  can  take  up  its  obli- 
gations and  continue  to  collect  interest  on  them  from  her 
citizens,  or,  in  other  words,  from  herself.  Another  thing,  I 
understand  that  the  $1,585,500  bonds  referred  to  in  to- 
day’s Enquirer  as  taken  up  by  the  Sinking  Fund  were  re- 
placed by  other  bonds  than  Southern  Railroad  bonds.  The 
Southern  Railroad  bonds  are  held  by  the  sinking  fund  and 
are  stamped  ‘canceled,’  according  to  law,  and  the  people 
are  paying  the  interest  not  only  on  the  canceled  bonds  but 
also  on  the  bonds  which  were  put  out  in  their  stead  or  ex- 
changed for  them.  This  looks  like  double  taxation  with  a 
vengeance.” 

Another  gentleman  said:  “ The  Enquirer’s  statement 


90 


to-day  regarding  the  Southern  bonds  is  one  that  anyone  can 
understand  readily,  and  I don’t  see  what  is  to  hinder  the 
Sinking  Fund  Commission  from  making  as  clear  statements, 
instead  of  the  complicated  ones  they  as  well  as  other  boards 
present  to  the  people.  I’ll  venture  to  say  the  majority  of 
the  Sinking  Fund  Commission  gained  more  knowledge 
about  the  business  from  the  Enquirer’s  statement  than  they 
ever  did  from  the  annual  report  of  the  Trustees,  of  which  * 
body  they  are  members.  I know  of  at  least  one  member  of 
the  Sinking  Fund  Trustees  who  never  knew  before  that  $1,- 
760,000  of  bonds  had  been  taken  up  and  destroyed.” 

Everybody  was  surprised  but  gratified  to  learn  that  the 
city  is  in  such  good  shape  as  to  the  Southern  Railroad, 
and  expressed  surprise  that  the  Sinking  Fund  Commission 
had  not  apprised  the  taxpayers  of  the  fact. 

One  of  the  Trustees  of  the  Southern  Railway  who  was 
seen  yesterday  and  asked  for  an  opinion  on  the  subject, 
said:  “It  would  not  be  proper  tor  me  to  talk  just  at  the 
present  time.  I will  say,  however,  that  I have  always 
claimed  that  the  city  had  a good  asset  in  the  Southern 
Road,  I admit  I didn’t  know  the  difference  between  the 
rental  received  from  the  property  and  the  legitimate  annual 
interest  on  the  bonded  debt  was  but  $38,127,  as  so  clearly 
shown  in  the  Enquirer.  I did  know,  however,  from  figuring 
I did  myself  that  about  $131,000  more  annual  interest  was 
being  collected  from  the  people  than  should  be  fairly.  Yes, 
the  city  can  certainly  very  easily  within  the  next  three 
years  at  the  outside  refund  the  outstanding  7 and  7.3  per 
cent  bonds,  due  in  1902,  into  bonds  bearing  at  the  highest 
four  per  cent  interest,  which  will  effect  a saving  to  the 
taxpayer  of  about  $250,000,  which  added  to  the  $90,000 
increase  in  rental  which  commences  next  October  will 
make  $340,000,  and  leave  the  city  a net  annual  income 
from  the  road  of  $300,000. 

“The  Enquirer  certainly  told  the  truth  when  it  said 
the  road  would  soon  be  in  shape  to  earn  its  own  sinking 
fund  for  retiring  the  bonds.  The  facts  must  be  a powerful 
blow  to  those  citizens  who  have  been  wanting  to  give  the 
property  away. 

The  Board  of  Sinking  Fund  Trustees  met  yesterday, 


91 


and,  contrary  to  all  expectations,  failed  to  discuss  the  South- 
ern Railroad  matter.  The  Board  was  in  session  only  about 
half  an  hour,  and,  after  disposing  of  a batch  of  routine  bus- 
iness that  pertained  chiefly  to  the  redemption  of  bonds,  &c., 
adjourned  and  filed  out  of  the  building. 

Mr.  Hinkle,  who  was  seen  after  the  meeting  by  an 
Enquirer  representative,  when  asked  what  the  Trustees  had 
done,  said:  “Only  routine  business.” 

“Did’nt  you  take  up  the  question  of  a sale  of  the 
Southern  Road,  or  receive  any  bids  for  it ?”  he  was  asked. 

“No.  There  is  a lull  in  that  business  for  the  pres- 
ent.” 

President  Woodford  is  going  back  to  New  York  this 
week.  He  says  he  thinks  the  visit  of  himself  and  associ- 
ates to  this  city,  and  their  conference  with  the  Sinking 
Fund  Trustees,  has  done  some  good.  He  admits  nothing 
definite  has  been  accomplished,  but  he  thinks  progress  has 
been  made.  He  says  a sale  of  the  road,  in  his  opinion, 
would  be  best  for  the  road,  for  Cincinnati,  and  for  himself 
and  associates.  He  added  that  the  question  would  be  taken 
up  by  himself  and  associates  in  New  York,  and  later  on  a 
definite  offer  will  be  made  the  Sinking  Fund  Trustees. 

PRESIDENT  INGALLS  TALKS. 

President  Ingalls,  of  the  Big  Four  and  Chesapeake 
and  Ohio,  who  has  shown  his  well-known  financiering  qual- 
ities on  more  than  one  occasion,  was  seen  yesterday  and 
asked  if  he  thought  it  was  right  for  the  Sinking  Fund  Com- 
mission to  take  up  Cincinnati  Southern  Railroad  bonds  with 
money  provided  by  the  people,  destroy  the  bonds,  and  con- 
tinue to  make  the  people  pay  the  interest  on  them. 

He  said  very  decidedly  that  he  thought  it  was  not 
right  to  collect  interest  on  any  bonds  after  they  had  been 
taken  up,  either  those  that  had  been  destroyed  or  those 
stamped  canceled  and  held  by  the  Sinking  Fund.  He  ad- 
ded : “I  do  not  think  that  a good  many  things  done  by  the 
Sinking  Fund  Trustees  are  right.  I think  the  policy  pur- 
sued entirely  wrong,  although  it  is  claimed  that  many  of 
these  acts  are  authorized  by  law.” 


92 


“Mr.  Ingalls,  do  you  think  the  7.3  and  7 per  cent  South- 
ern Railroad  bonds  outstanding  that  fall  due  in  1902  could 
be  refunded  within  the  next  three  years  into  lour  per  cents 
without  costing  much  premium  on  the  high  rate  bonds?” 

“Yes,  the  bonds  could  be  readily  refunded,  I think, 
but  the  city  would  be  compelled  to  pay  a premium,  but  not 
a large  one.  I think  Cincinnati  ought  to  be  able  to  place 
bonds  drawing  less  than  four  per  cent  interest.  I think, 
in  fact,  the  city  could  get  money  at  three  per  cent.” 

“Didn’t  you  refund  some  high-rate  interest  bonds  for 
the  Big  Four  before  the  Big  Four-Bee  Line  consolidation?” 

“Yes,  I took  up  about  $9,000,000  seven  and  six  per 
cent  bonds,  and  replaced  them  with  fours.” 

“How  long  did  it  take  you  to  accomplish  the  refunding?” 

“I  think  a little  over  a year.” 

“How  many  of  the  bonds  drawing  the  lower  rate  of 
interest  were  issued  to  take  the  place  of  the  high-rate  bonds  ?” 

“Ten  million  dollars.” 

“The  trade  was  a profitable  one,  wasn’t  it,  for  the  Big 
Four  Company?” 

“Yes,  or  it  wouldn’t  have  been  made.” 

“Do  you  think  the  Southern  Road  should  be  sold?” 

“As  a citizen  of  Cincinnati,  with  the  city’s  interest  at 
heart,  I do  not.  I favor  a perpetual  lease  at  a stated  rental 
with  a percentage  of  the  earnings  when  they  reach  more 
than  a certain  amount  to  go  to  the  city.” 


Cincinnati  Enquirer,  June  14,  1896. 

OPINIONS  ON  THE  SOUTHERN  BID. 

Hon.  E.  A.  Ferguson  on  the  Legal  Status. — T.  J.  Emery 
Would  Not  Consider  the  Proposition. 

The  position  maintained  by  Hon.  E.  A.  Ferguson  in 
regard  to  the  sale  of  the  Cincinnati  Southern  is  well  known. 
When  Mr.  Ferguson  was  asked  what  he  thought  of  the 
terms  of  the  proposed  sale  he  declared  that  to  begin  with 
he  held  as  ever  that  a sale  of  the  road  was  entirely  impos- 


93 


sible  unless  certain  legislation  should  be  enacted  looking 
to  the  formation  of  a company  for  the  purchase  of  the 
road.  Mr.  Ferguson,  however,  when  furnished  with  a copy 
of  the  proposition  by  a representative  of  the  Enquirer  read 
it  all  over  very  carefully. 

“I  am  free  to  confess,”  said  he,  “that  in  a cursory 
reading  I am  unable  to  understand  the  document.  Its 
terms,  from  a practical  business  point  of  view,  need  to  be 
carefully  studied  and  analyzed,  and  from  first  glance  I 
would  look  upon  it  with  disfavor.  But  I would  not  want 
to  be  placed  in  the  position  of  being  antagonistic  to  the 
sale  if  it  can  be  brought  about  in  a proper  way  and  the 
people  sanction  it.  It  is  not  an  objection  to  the  sale  of  the 
road  at  all,  so  mnch  as  the  opinion  that  it  cannot  now  be 
sold.  People  say,  of  course  that  I am  one  of  the  Trustees 
and  don’t  want  the  road  sold  out  of  the  hands  of  the  Board 
of  Trustees.  So  I would  rather  not  say  that  the  proposi- 
tion should  be  rejected,  but  I must  say  that  I do  not  see 
how  it  can  be  accepted. 

“I  have  very  carefully  examined  the  laws  of  Kentucky 
and  have  had  them  examined  by  others  competent  to  do  so 
and  I am  convinced  that,  like  the  laws  of  Ohio,  there  is 
nothing  in  them  to  provide  for  the  purchase  of  the  road  by 
any  company  whatever.  As  for  the  business  end  of  the 
proposition  you  should  see  some  of  the  sound  business  men 
of  the  city  who  have  the  good  judgment  that  will  make 
their  opinion  of  value.  No  one  who  would  be  more  compe- 
tent to  judge  of  the  advantages  or  disadvantages  to  the  city 
in  these  terms  of  sale  than  Mr.  Thomas  J.  Emery,  and,  be- 
sides, he  has  made  a study  of  this  very  question  of  the  sale 
of  the  road. 

“As  for  the  legal  side  of  this  proposition,  it  cannot  be 
binding,  in  the  first  place  for  the  reason  that  I have  cited. 
It  is  a mere  paper  proposition  and  one,  if  ratified,  would 
hold  neither  the  individual  making  it  nor  the  city.  It  is 
simply  a case  of  some  individuals  promising  to  form  a com- 
pany for  the  purpose  of  acquiring  the  road,  and  these  indi- 
viduals cannot  be  held  liable  nor  can  they  issue  bonds,  in 
fact,  nor  do  such  things  as  are  of  a necessity  the  offices  of 
a corporation. 


94 


MR  EMERY 


Calls  Attention  To  the  Drawbacks  in  the  Bid. 

Acting  upon  the  suggestion  of  Mr.  Ferguson,  Mr. 
Thomas  J.  Emery  was  seen  by  the  Enquirer  and  his  atten- 
tion called  to  the  proposition  that  the  Sinking  Fund  Trus- 
tees had  favored.  He  read  the  terms  critically,  and  seemed 
somewhat  surprised  at  the  action  of  the  board.  Mr.  Emery 
said  that  the  terms  as  set  forth  he  would  reject  without 
any  hesitation. 

“It  is  simply  foolish,”  said  he.  “There  is  only  one  thing 
that  there  is  any  uncertainty  about  or  upon  which  I am  not 
competent  to  pass  judgment,  and  that  is  reference  to  the 
10  per  cert  of  the  gross  earnings  above  $4,500,000.  I 
would  have  to  know  positively  what  the  present  earnings 
are  and  what  they  have  been,  so  as  to  be  able  to  estimate 
future  earnings.  As  for  the  rest  of  the  proposition  it 
means  simply  that  the  city  shall,  after  October  1st  of  this 
year,  give  up  the  rental  that  it  receives  now  and  take  in 
place  thereof  $760,000  per  annum,  increased  for  six  years 
by  the  payment  of  $240,000,  which  makes  a total  of  $1,000 
000,  or  a sum  less  than  the  amount  which  we  will  be  receiv- 
ing under  the  present  lease  after  October  1st.  After  the 
expiration  of  these  six  years  the  city  would  be  receiving 
only  $760,000  per  year  on  a perpetual  lease,  plus  the  per- 
centage on  the  gross  earnings,  which  is  an  uncertain 
quantity 

As  for  the  clause  providing  for  the  payment  of  rentals 
on  some  leaseholds  that  is  mere  bagatelle.  As  far  as  in- 
demnifying the  city  against  all  claims  of  the  C.  N.  O.  and 
T.  P.  Railroad,  that  refers  to  the  suit  for  damages  for  not 
furnishing  terminal  facilities  which  has  been  settled  in  the 
city’s  favor  already.  As  for  betterments  to  the  amount 
of  $250,000  per  annum  any  owner  of  the  road  will  expend 
this  much  for  the  road’s  betterment.  When  the  proposition 
speaks  of  securing  the  payment  of  sums  required  by  the 
deposit  of  bonds,  you  may  be  sure  that  these  payments  will 
be  made  without  any  security  under  such  favorable  terms  as 
the  proposed  sale  provides  for.  The  transfer  of  this  lease 


95 


to  a corporation,  made  probably,  under  the  laws  of  Ken- 
tucky, with  no  personal  liability,  is  objectionable. 

“Why  should  the  city  accept  a much  less  sum  ac- 
cording to  this  proposition  than  the  present  lessees  have 
agreed  to  pay  during  the  remainder  of  the  lease,  and  then 
at  the  expiration  of  six  years  have  the  whole  of  these  pay- 
ments to  suddenly  decrease  to  $760,000  per  year?  It  is  a 
proposition  too  rediculous  to  be  entertained.  I have  been 
informed  by  persons  in  a position  to  know  that  the  road  now 
earns  over  $1,000,000  net,  and  that  its  gross  earnings  have 
regularly  increased  since  the  road  was  opened.  Every 
business  man  should  see  that  the  proposition  to  sell  the 
road  perpetually  for  the  paltry  sum  of  $760,000  per  year, 
even  with  the  per  cent  of  gross  earnings  added,  should  not 
be  entertained  for  a moment. 


From  the  Commercial  Gazette,  June  13,  1896. 

THE  SOUTHERN,  AND  WHAT  WILL  THEY 
DO  WITH  IT? 


Disposition  to  Keep  Developments  Dark,  Which,  Like 

Other  Schemes,  Goes  Aglee — Outline  of  the  Pro- 
* posal  Under  Consideration,  with  Service  of  Notice. 

So  far  as  the  railroad  officials  will  admit,  there  are  no 
new  developments  in  the  proposed  purchase  or  lease  of  the 
Cincinnati  Southern  road.  At  the  Cincinnati,  Hamilton  and 
Dayton  general  offices  the  information  was  given  out  yes- 
terday that  “there  was  nothing  new.” 

President  Woodford  and  Henry  A.  Taylor,  represent- 
ing the  C.  H.  & D.,  were  busy  the  most  of  the  day,  and 
when  seen  neither  would  give  any  information  on  the  sub- 
ject. 

The  Sinkii  g Fund  Commissioners’  Committee  of  the 
whole  was  equally  reticent.  The  tenor  of  the  treatment  re- 
ceived by  press  representatives  indicated  a conviction  on 
the  part  of  those  having  the  affairs  of  the  Southern  in  hand 
that  it  was  a private  snap  and  not  a public  trust  under  con- 


93 


sideration,  and  that  they  fully  subscribed  to  Vanderbilt’s 
bluntly  expressed  sentiments. 

That  the  people  of  Cincinnati,  the  owners  of  the  road, 
are  interested  in  the  juggle  that  is  going  on  behind  closed 
doors  is  a matter  of  fact  that  the  Commercial  Gazette  recog- 
nizes, the  Sinking  Fund  Commissioners’  committee  and  the 
railroad  magnates  to  the  contrary  notwithstanding.  It  there- 
fore follows  that  the  outline  of  the  proposal  now  under  star 
chamber  consideration  is  here  given. 

In  effect  the  proposal  is  to  issue  $19,000,000  four  per 
cent  bonds,  and  pay  $250,000  cash  each  year  during  the 
present  lease,  an  equivalent  to  $1,000,000  on  the  basis  of 
the  present  lease.  After  a certain  time  to  allow  a stated 
per  cei  t of  the  gross  earnings.  The  amount  of  proposed 
cash  payment  is  to  be  small. 

The  Commercial  Gazette  in  this  connection  serves  no- 
tice on  the  Commissioners  of  the  Sinking  Fund  that  no 
amount  of  cash  less  than  $2,000,000,  at  least  no  contract 
that  would  contemplate  payment  of  less  than  $2,000,000, 
will  receive  the  indorsement  of  the  people  of  Cincinnati. 
Nor  will  the  people  of  Cincinnati  sanction  any  sale  that 
does  not  contemplate  a substantial  and  adequate  cash  pay- 
ment. 


From  the  Commercial  Tribune,  June  28,  1896. 

TWO  MEN’S  VIEWS  — NEITHER  APPROVES  THE 
SALE  . OF  THE  SOUTHERN. 

“A  Poor  Business  Policy.” — James  J.  Hooker  Thinks  No 
Cause  For  Stampede. — General  Lewis  Seasongood 
Was  one  of  the  Board  Making  the  Present  Lease, 
and  Shows  Losses  by  the  New  Venture. 

When  asked  his  opinion  of  the  proposed  sale  of  the 
Cincinnati  Southern  Road,  Mr.  James  J.  Hooker  replied 
that,  in  his  opinion,  too  little  attention  had  been  given  to 
this  matter  by  the  taxpayers  and  business  organizations,, 


97 


and  it  was  time  that  voters  should  receive  information  upon 
the  subject,  and  he  was  glad  td  see  the  Commercial  Trib- 
une giving  prominence  to  this  question. 

“The  great  argument  for  a sale  now  has  been,”  said 
he,  “that  the  road  should  pass  into  the  hands  of  a com- 
pany that  would  inaugurate  improvements,  build  branches 
and  otherwise  develop  the  property,  and  that  if  not  sold,  and 
sold  quickly,  the  operating  company  may  default  upon  the 
rental,  or  the  road  might  be  paralleled.  Of  course  it  is  to 
be  expected  that  such  arguments  as  these  should  be  used 
by  tiose  interested  in  its  sale.” 

“For  one,  I do  not  believe  the  operating  company  will 
default  upon  its  rental.  If  it  does,  the  road  is  a going 
concern,  fully  organized  in  every  department,  with  ample 
rolling  stock,  which  under  clause  7 of  the  agreement  would 
be  forfeited  to  the  city,  and  there  need  not  and  would  not 
be  any  interruption  to  its  business.  The  men  for  such  oc- 
casions have  always  been,  and  will  be  found  if  the  emer- 
gency arises.  The  taxpayers  and  citizens  of  Cincinnati 
should  not  permit  themselves  to  be  stampeded,  but  deter- 
mine to  face  any  contingency  that  may  arise  rather  than 
make  a bad  sale  to  unsatisfactory  parties  or  to  a company 
not  yet  organized. 

“Passing  over  the  fact  as  to  the  absence  of  security 
to  the  city  in  the  contemplated  sale,  other  than  the  pro- 
posed expenditure  for  betterments,  and  that  the  city  is 
asked  to  surrender  $600,000  in  excess  of  this  expenditure, 
we  should  not  lose  sight  of  the  object  for  which  the  road 
was  built,  and  that  was  to  develop  business  between  Cin- 
cinnati and  the  South,  The  question  naturally  arises,  How 
can  this  be  best  brought  about?  In  my  opinion,  by  leas- 
ing or  selling  the  road,  under  satisfactory  guarantees,  to  one 
of  the  Southern  systems  containing  a large  mileage  that 
can,  in  whole  or  in  part,  be  made  tributary  to  Cincinnati. 
The  object  can  not  be  accomplished  by  disposing  of  the 
road  to  an  independent  company  with  termini  in  Cincinnati 
and  Chattanooga.  Neither  can  it  be  accomplished  by  dis- 
posal to  a company  having  any  entangling  alliances  north 
of  the  Ohio  River. 

“The  newspaper  headlines  have  succeeded  in  creating 


98 


the  impression  in  the  minds  of  the  public  that  it  is  the  C. 
H.  & D.  R.  R.  which  is  interested  in  the  proposed  pur- 
chase. This  should  be  corrected.  The  C.  H.  & D.  R.  R.  as 
a road  is  not  interested  in  the  proposed  company,  but  the 
Eastern  capitalists  interested  in  the  C.H.  & D.  undoubted- 
ly see  in  this  an  opportunity  to  turn  an  honest  penny  by 
selling  their  interest  eventually  to  the  Southern  Railway 
people,  or,  perhaps,  to  some  Southern  system  antagonistic 
to  the  Southern  Railway  Company  — the  Louisville  and 
Nashville,  for  instance. 

“It  goes  without  saying  that  when  the  time  comes  to 
make  that  trade,  it  will  be  worked  in  a way  to  produce  the 
most  profit.  The  Southern  Railway  already  controls,  joint- 
ly with  the  L.  & N.,  the  Georgia  road  running  from  Au- 
gusta to  Atlanta.  Railroad  traffic  men  know  in  what  in- 
terest the  Georgia  road  is  run,  and  how  the  Southern  Rail- 
way management  would  enjoy  another  such  deal.  It  is  only 
necessary  to  hint  at  the  possibilities  of  entanglements  grow- 
ing out  of  this  joint  ownership  to  convince  all  who  are  not 
actuated  by  any  but  a blind  determination  to  sell  the  road 
that  no  deals  should  be  made  with  the  company  whose  prop- 
osition is  now  under  consideration  and  to  be  passed  upon 
by  the  voters  of  Cincinnati.  The  phenomenal  growth  of 
Chicago  has  been  the  result  of  the  fact  that  all  important 
lines  of  railroads  terminate  there ; none  run  through  Chi- 
cago. 

“Had  the  Chicago,  Burlington  and  Quincy  its  eastern 
terminus  at  Detroit,  the  Milwaukee  and  St.  Paul  its  eastern 
terminus  at  Indianapolis,  the  Lake  Shore  and  Michigan 
Southern  its  western  terminus  at  Dubuque,  the  Pennsyl- 
vania its  western  terminus  at  St.  Paul,  Chicago  would  not 
have  become  the  second  city  in  the  Union. 

“But  why  accept  the  present  proposition  made  by  a 
nondescript  company,  when  the  Southern  Railway  had  pre- 
viously made  substantially  the  following  proposition,  and 
no  doubt  would  make  it  or  a better  one  if  the  present  one 
were  rejected. 

“Rental  to  remain  at  $1,000,000  until  expiration  of 
present  lease.  After  that,  four  per  cent  on  the  cost  of  the 
road  ($18,000,000)  and  10  per  cent  of  gross  earnings  in 


99 


excess  of  $4,000,000,  and  a sum  to  the  Sinking  Fund  of 
Cincinnati  which  in  sixty  years  will  pay  off  the  Southern 
Railroad  debt  ($18,000,000).  The  road  then  to  become  the 
property  of  the  leasing  company 

“Beginning  with  the  termination  of  the  sixty  year 
period,  leasing  company  to  pay  ten  per  cent  on  gross  earn- 
ings forever.  One  million  dollars  of  Government  or  city 
bonds  to  be  deposited  for  faithful  performance  of  contract. 

“It  is  an  admitted  fact  that  the  Southern  Railway 
Company  want  no  alliance  with  the  so-called  C.  H.  & D. 
parties,  but  it  has  been  forced  upon  them,  largely  as  the 
result  of  legislation  procured  in  Alabama  in  the  winter  of 
’94-95,  by  the  aid,  I am  sorry  to  say,  of  the  Cincinnati 
Chamber  of  Commerce,  which  lent  its  great  influence  for 
the  private  gain  of  the  gentlemen  who  control  the  C.  H.  & D. 
Please  understand  that  I have  nothing  against  these  gentle- 
men privately  or  in  their  management  of  the  C.  H.  & D.;  in 
either  capacity  they  are  entitled  to  our  respect,  but  what- 
ever profit  they  make  out  of  the  present  deal  must  eventu- 
ally be  a loss  to  the  City  of  Cincinnati. 

“But  my  opposition  to  its  sale  to  the  proposed  com- 
pany is  not  for  this  reason,  but  because  I think  I see  in  it 
a great  impediment  to  the  growth  of  the  business  relations 
between  Cincinnati  and  the  South,  and  if  our  trade  does 
not  grow  from  that  quarter  we  will  go  backward  as  a com- 
mercial and  manufacturing  city. 

“It  seems  somewhat  surprising  that,  considering  the 
importance  of  the  matter  to  the  taxpayers  and  business  men 
of  Cincinnati,  there  has  been  no  call  for  a meeting  to  dis- 
cuss the  proposed  sale,  and  to  take  such  action  as  may  be 
deemed  proper.” 

GENERAL  SEASONGOOD  OPPOSES. 

When  the  Sinking  Fund  Trustees  received  from  the  C. 
H.  & D.  and  the  Southern  Railway  Company  their  bid  for 
the  purchase  of  the  Cincinnati  Southern,  Gen,  Lewis  Sea- 
songood  was  in  New  York.  When  he  returned  about  a 
week  ago  he  was  asked  for  an  opinion  as  to  the  offer  made 
by  these  companies.  He  refused  to  give  an  answer,  saying 
he  had  not  had  an  opportunity  to  investigate. 

100 


, Saturday  morning  he  was  again  asked  for  an  opinion 
as  to  the  proposition. 

“I  don’t  like  it,”  was  the  General’s  prompt  response. 
“Since  you  asked  me  that  question  before,  I have  made  a 
careful  study  of  the  terms  offered,  and  am  prepared  to  say 
that  I do  not  think  the  city  can  afford  to  part  with  the  road 
on  any  such  a basis,  and  I’ll  tell  you  why. 

“Our  earnings  under  the  present  unexpired  lease  would 
average  during  the  remaining  eleven  years  nearly  $1,200,- 
000  a year.  That  would  be  an  income  of  four  per  cent  on 
a total  valuation  of  $30,000,000,  wouldn’t  it?  It  would  be 
about  63  per  cent  on  $19,000,000,  the  proposed  purchase 
price.  Thus,  you  see,  we  are  earning  four  per  cent  on  $30,- 
000,000  under  the  present  lease,  whereas  the  new  company 
proposes  to  guarantee  only  four  per  cent,  on  $19,000,000 
after  the  expiration  of  the  present  lease. 

“We  are  parting  with  our  property  and  having  left  no 
substantial  security — in  fact,  no  mortgage  security  what- 
ever. We  receive  no  earnest  money  on  account  to  secure 
the  unpaid  purchase  money  promised,  whereas  under  the 
present  lease  we  have  nearly  $5,000,000  of  security  in  the 
rolling  stock,  shops,  machinery  and  all  kinds  of  real  and 
personal  property  of  the  leasing  company,  besides  the  indi- 
vidual liability  of  its  shareholders. 

“Against  that  we  are  offered  simply  $19,000,000  of  4 
per  cent  bonds  not  secured  by  anything,  because  the  city’s 
obligations  are  already  against  the  property. 

“The  city  should  receive  at  least  $3,000,000  or  $4,- 
000,000  cash  to  bind  t e sale  and  avoid  the  road’s  being 
again  thrown  on  its  hands  after  the  new  company  has  ob- 
tained control  by  ownership.  It  is  possible  for  the  new 
company  to  form  such  entangling  traffic  alliances  and  con- 
tracts as  to  virtually  make  our  $19,000,000  worthless.  I 
really  believe  the  road  worth  $30,000,000  to-day,  and  I am 
opposed  to  selling  it  for  the  price  offered  or  on  the  terms 
proposed.” 

General  Seasongood  was  a member  of  the  Board  of 
Trustees  that  contracted  with  the  existing  leasing  company, 
and  is  familiar  with  the  road  and  with  the  conditions  of  the 
operating  company.  His  opinion  is  therefore  of  the  great- 
est value. 


101 


From  the  Cincinnati  Post,  July  2,  1896. 

GOOD  THING 

Is  the  Present  Southern  Railroad  Contract  to  City  and 

Lessees,  Says  Hon.  E.  A.  Ferguson — No  Danger  of 

Default  in  Rental,  He  Claims, 

Hon.  Alexander  Ferguson  said  concerning  the  legal 
aspect  of  the  Southern  Railroad  case:  “The  Supreme  Court 
is  wrong  in  holding  that  we  Trustees  have  power  to  sell  the 
road.  There  is  no  law  in  Ohio,  Kentucky  or  Tennessee 
authorizing  a corporation  to  buy  the  Southern,  and  without 
the  consent  of  those  States  no  corporation  can  issue  bonds 
or  give  mortgage  security  for  that  purpose.  It  is  true  our 
Supreme  Court  in  the  Moot  case  has  decided  Ohio  can  do 
so  without  procuring  legislation  in  Kentucky  and  Tennes- 
see. Years  ago,  when  we  proposed  to  change  the  gauge  of 
five  feet  to  conform  to  the  standard  Northern  gauge,  the 
Trustees  obtained  the  opinion  of  learned  counsel  in  those 
States,  and  we  were  advised  we  could  make  no  change  with- 
out legislative  assent.  That  we  obtained.  If  we  could  not 
make  an  improvement  without  such  assistance,  how  can 
we  sell  the  property  without  similar  assistance  ? Kentucky 
and  Tennessee  general  laws  authorize  building  and  main- 
taining of  railroads,  but  have  no  provision  for  purchase  of 
an  existing  road.  All  this  has  been  decided  by  our  own 
Supreme  Court  years  ago.  The  income  derived  from  the 
rentals  is  specifically  pledged  to  the  holders  of  the  first  is- 
sue of  $10,000,000  bonds,  and  without  their  consent  we 
cannot  agree  to  sell.  The  Trustees  have  a mortgage  on 
everything,  including  even  the  coupling  pins.  There  is  no 
default  of  rental,  and  there  will  be  none.  The  lessee  has  a 
good  thing  now,  so  has  the  city.  The  bondholders  will  ap- 
peal to  the  United  States  Court  for  protection  before  their 
security  is  submitted  to  a change. 


102 


From  the  Commercial  Tribune,  July  8,  1896. 

OPINION  ON  THE  SALE. 


Mr.  Powell  Crosley  Thinks  There  Should  Be  No  Haste. 

To  the  Editor  of  the  Commercial  Tribune : 

I have  been  an  interested  reader  of  your  articles,  in- 
terviews upon  the  sale  of  the  Southern  Railroad. 

I d)  not  propose  to  go  into  the  matter  at  any  length, 
but  I am  opposed  to  the  proposition  of  Messrs.  Andrews 
and  Taylor  for  the  following  reasons  among  others: 

1.  I do  not  now  believe,  and  never  have  believed  that 
the  Southern  Railroad  was,  is,  or  is  likely  to  be,  a property 
of  which  this  city  should  be  ashamed.  I believe  the  time 
will  come  when  the  road  will  not  only  pay  the  bonds  the 
city  is  obligated  to  pay  for  money  put  into  the  road,  but 
the  running  expenses  of  the  city  economically  administered 
as  well. 

2.  This  is  no  time  to  sell  the  road.  Everything  is  de- 
pressed. People  able  to  hold  property  do  not  force  it  upon 
the  market  at  such  times.  The  city  is  able  to  hold  and 
not  to  dispose  of  it  to  the  first  comer,  and  at  their  own 
figure. 

3.  I am  not  afraid  that  the  United  States  Court  will 
allow  the  rental  to  go  in  default.  That  is  not  the  way  Judge 
Taft  allows  its  court  to  do  business.  But  if  there  should  be 
default,  I have  an  abiding  faith  that  it  would  not  be  difficult 
to  get  others  to  step  in  the  shoes  of  the  leasing  company. 

4.  Times  are  going  to  improve.  It  is  in  the  air.  Long 
before  the  present  lease  expires  the  city  will  be  able,  in  my 
judgment,  to  make  a perpetual  lease  of  the  road  at  $1,250, - 
000  per  year,  or  more,  and  this  is  what  it  should  do. 

5.  Think  of  the  folly  of  selling  (not  leasing)  to  the 
same  parties  who  now  have  the  road,  at  a loss  of  millions  of 
dollars  to  the  city,  for  fear  that  these  same  parties  may  de- 
fault upon  their  present  contract.  The  above-named  par- 
ties now  control  the  road,  subject  to  the  receivership.  It 
looks  like  discharging  one’s  servant  and  hiring  him  over 
again  at  better  wages. 


6.  I am  opposed  to  a sale,  i favor  a perpetual  lease. 
But  if  a sale  is  made,  let  it  be  made  when  times  are  better 
and  for  cash,  so  that  we  know  we  will  get  it,  and  let  us  get 
enough  to  enable  us  to  go  into  the  market  and  buy  up  the 
Southern  Railroad  bonds  at  their  market  price,  and  thus 
relieve  the  city  of  that  great  burden.  Upon  the  plan  now 
submitted  to  the  voters  of  the  city  the  city  would  have  to 
carry  these  bonds  forever,  so  far  as  the  income  of  the  road 
was  concerned. 

7.  It  is  proposed  to  cancel  a good  contract,  in  which 
the  city  retains  the  title  to  the  road,  for  a much  poorer  one 
as  to  income  in  which  the  city  parts  with  the  title.  No  bus- 
iness man  in  his  own  affairs  would  think  of  doing  such  a 
thing. 

8.  The  city  is  to  deed  the  property  away  and  take  a 
mortgage  for  the  full  consideration  ($19,000,000)  without 
a dollar  paid  down,  and  practically  without  additional  se- 
curity to  the  property  itself.  People  in  their  ordinary 
transactions  do  not  do  business  in  this  way.  People  require 
a fourth,  a third,  and  maybe  a half,  paid  in  cash  in  ordi- 
nary transactions  as  an  evidence  of  good  faith,  but  here 
nothing  is  required,  practically. 

9.  What  is  to  prevent  a railroad  wrecker  from  getting 
hold  of  this  work  and  plyirg  his  trade?  Where  would  the 
city  be?  How  soon  after  a receiver  was  appointed  to  take 
charge  of  the  wrecked  road — designedly  wrecked — would 
the  croaker  be  heard  declaring  that  things  were  in  a bad 
shape,  and  insisting  on  taking  what  we  could  get  or  the 
road  would  be  sold  out  and  the  city  be  compelled  to  take 
what  it  could  get  without  being  able  to  be  a competitor  in 
bidding  it  in  at  the  sale,  or  if  an  enabling  act  were  passed 
permitting  it  to  buy,  in  what  position  would  it  be  with  a 
wrecked  road  on  its  hands? 

The  people  should  look  into  this  matter  carefully. 
There  should  be  no  haste.  Very  truly, 

POWELL  CROSLEY. 


104 


From  the  Volksblatt,  Sunday,  June  21,  1896. 

THE  SOUTHERN  ROAD. 


Opinions  of  Citizens  in  Regard  to  the  Proposed  Sale — The 
Present  Time  Is  Considered  the  Most  Unfavorable. 


Whether  the  proposed  sale  of  the  Southern  Road  will 
be  submitted  to  a vote  of  the  people  depends  entirely  upon 
the  decision  of  the  Supreme  Court  of  the  State.  This  is 
expected  before  the  beginning  of  the  summer  vacation  of 
the  Court.  The  German  citizens  and  taxpayers  in  gen- 
eral are  not  in  favor  of  the  sale  because  the  present 
especially  is  the  most  unfavorable  time  to  sell  any- 
thing. Thus,  Mr.  Henry  Muelhauser  expressed  himself, 
and  to  him  the  terms  also  seem  too  unfavorable. 
“The  purchaser  should  pay  in  cash,  without  any  condi- 
tions, at  least  one-fourth  of  the  purchase  price,”  declared 
he,  “ and  as  the  offer  is  nothing  like  this,  we  ought  to  keep 
the  road  for  some  time  yet,  rather  than  let  it  go  on  such 
terms.  The  citizens  will  have  to  be  watchful,  however, 
that  unscrupulous  politicians  do  not  devise  a plan  to  sell 
the  road  in  such  a way  that  the  citizens  will  not  receive  a 
cent;  in  other  words,  that  the  road  is  not  stolen  from  us.” 

Mr.  F.  H.  Alms:  “I  am  decidedly  opposed  to  the 
sale  of  the  road  under  the  present  offer.  It  is  worth  more, 
and  the  city  should,  at  least,  get  five  millions  more  for  it. 
In  general,  the  entire  way  in  which  the  sale  was  under- 
taken don’t  suit  me,  because  it  is  too  one-sided  and  offers 
the  city  no  advantage  of  any  sort.” 

Mr.  Christian  Boss  expressed  himself  as  follows  in  re- 
gard to  the  projected  sale  : “ In  view  of  the  present  condi- 
tion of  business,  a sale  of  the  Southern  Road  should  not 
be  thought  of.  The  prices  of  all  merchandise  everywhere 
are  below  value  at  this  time,  and  if  the  road  must  be  sold 
at  all,  then  before  everything  else  we  ought  to  wait  at 
least  until  the  business  of  the  country  has  again  picked 
up.  Anyhow,  I can’t  see  what  advantage  the  city  can  de- 
rive from  the  offer  that  has  been  made.  If  the  road  is  only 
to  be  leased  and  the  purchase  is  not  to  take  place  for  a 


105 


hundred  years,  then  there  is  certainly  no  particular  hurry 
in  the  matter,  and  we  can  quietly  wait  until  times  get  bet- 
ter. Under  the  present  circumstances  and  the  present  con- 
dition of  business,  I am  decidedly  opposed  to  the  sale.” 

Mr.  Marcus  Rasche  is  likewise  not  satisfied  with  the 
•bid.  “ I am,”  said  he,  “ in  favor  of  a cash  sale  of  the  road. 
The  city  should  never  have  meddled  with  the  building  and 
business  of  the  same.  A private  company  can  do  all  of  this 
much  cheaper.  Therefore,  I think  it  best  to  get  rid  of  the 
road  for  cash.  But  I do  not  regard  it  as  wise  to  lease  the 
road  for  a hundred  years.  According  to  my  opinion,  the 
bid  should  not  be  considered  at  all.” 

Mr.  Anthony  Rasche  expressed  himself  in  the  same 
way,  adding  that  the  present  was  the  best  time  to  buy,  but 
the  worst  to  sell.  Mr.  Rasche  was  likewise  not  satisfied 
with  the  bid. 

Mr.  Charles  F.  Muth  is  also  an  advocate  of  the  project. 
He  declared  that  he  could  not  favor  the  bid,  which  he  by 
no  means  regarded  as  advantageous  to  the  city.  A direct 
sale  of  the  road  for  cash  or  upon  installment  payments 
within  a reasonable  time  is  preferable,  in  his  opinion,  to  a 
mere  lease  of  the  same  under  the  given  terms. 

“ Why  should  the  sale  of  the  Southern  Road  be  so 
urgent,  all  of  a sudden?”  asked  Mr.  Louis  Huedepohl. 
“According  to  my  opinion,  the  sale  of  the  road  at  the  pres- 
ent time  is  not  advantageous  to  the  city.  Nowhere  are 
acceptable  prices  to  be  obtained.  Nowhere  is  the  full  value 
being  paid  for  property.  That,  in  spite  of  this,  it  is  so 
eagerly  desired  to  get  rid  of  the  road  appears  to  me  very 
singular,  to  say  the  least.  I am  most  positively  opposed 
to  the  sale,  and  will  vote  against  it.” 

“ I am  surprised  that  a bid  has  even  been  offered  al- 
ready,” said  Mr.  H.  A.  Langhorst.  “ The  road  is  paying 
very  well  at  present,  and  why  should  we  want  to  undertake 
a change  and  sell  the  road,  all  of  a sudden?  Besides,  the 
present  is  not  a suitable  time  for  this.  I think  we  ought 
also  to  have  regard  for  the  future.” 

Mr.  Julius  Pfleger  also  expressed  himself  as  decidedly 
opposed  to  the  sale  of  the  Southern  Road,  which  he  re- 
garded as  not  at  all  in  the  interests  of  the  citizens  of  our 


106 


city.  Above  all  things,  a perpetual  lease  should  not  be 
given,  because  we  do  not  know  what  may  happen  in  the 
future.  To  sell  large  property,  we  should  wait  for  a more 
favorable  time,  when  values  are  no  longer  depressed. 

Mr.  Ed.  Kleinschmidt  likewise  did  not  favor  the  sale  of 
the  road,  but,  on  the  contrary,  advised  positively  against  it. 

The  opinion  of  Mr.  F.  J.  Diem  is  that  the  road  should 
be  sold  if  an  acceptable  price  can  be  obtained  for  it;  but 
he  did  not  regard  the  present  offer  as  advantageous  to  the 
city. 

Mr.  J.  J.  Abbihl  also  expressed  himself  as  opposed  to 
a ninety-nine-year  lease.  “ The  road  should  be  sold,”  said 
he,  “if  it  is  possible  to  receive  an  approximate  value  of 
the  same  in  cash,  in  order  that  the  outstanding  bonds  might 
be  redeemed  with  the  money.  As  far  as  I know,  the  road 
is  paying  very  well  at  present,  and  there  is,  therefore,  no 
urgent  necessity  to  bring  about  a sale.  Nor  do  I believe 
that  a perpetual  lease  would  be  of  advantage  to  the  city.” 

Mr.  F.  Jelke  spoke  in  favor  of  continuing  the  existing 
relations  in  regard  to  the  road.  It  is  by  no  means  in  the 
interest  of  the  city  to  sell  the  road  under  the  present  de- 
pressed condition  of  business.  The  times  will  certainly 
become  better  again,  and  when  this  has  occurred  and  as  a 
result  better  prices  can  be  obtained,  then  it  will  still  be 
early  enough  to  think  of  a sale.  At  present  this  is  not 
advisable,  nor  commendable  under  any  circumstances. 

“ I hardly  believe  that  the  offer  in  regard  to  the  sale  of 
the  Southern  Road  is  an  advantageous  one,”  said  Mr.  Theo- 
dore Mayer,  “ and  it  also  appears  to  me  that  the  price  which 
was  bid  does  not  by  far  come  up  to  the  value  of  the  road. 
We  should,  therefore,  not  act  without  considering  the  mat- 
ter well,  and  should  not  conclude  the  sale  in  haste.  I am 
convinced  that  later  a better  price  can  be  obtained.” 

Mr.  W.  C.  Overbeck  is  also  of  the  opinion  that  a much 
better  price  can  be  secured  later  when  times  have  improved. 
For  this  reason  he  is  opposed  to  the  sale  in  view  of  the 
present  condition  of  the  times  and  the  low  value  of  all 
property. 

“ It  is  simply  ridiculous  to  think  of  the  sale  under  the 
present  condition  of  the  times,”  said  Mr.  J.  P.  Altenberg. 


107 


“A  better  price  ought  to  be  secured  for  this  valuable  road. 
The  times  are  certainly  not  favorable,  when  all  values  are 
depressed,  to  make  the'sale  of  the  road  appear  advisable.” 


From  the  Volksblatt,  Wednesday,  June  24,  1896. 

The  Supreme  Court  has  decided  that  the  city  has  a 
right  to  sell  the  Southern  Railroad  With  the  citizens  now 
rests  the  decision  as  to  whether  this  right  will  be  exercised. 
In  our  last  Sunday  number  we  published  the  views  that 
predominate  among  the  citizens  in  regard  to  it,  and  these 
are  mostly  opposed  to  the  sale  of  the  road  most  decidedly. 
Most  citizens  can  not  perceive  how  the  condition  of  the 
city  will  be  improved  if  it  gives  up  the  possession  of  the 
road  and  accepts  bonds  for  it.  According  to  their  opinion, 
the  possession  of  the  road  is  to  be  preferred  to  bonds  for 
debt  on  it.  To  them,  too,  the  present  time  when  every- 
thing is  depressed,  appears  to  be  unfavorable  for  the  sale. 
The  chief  argument  of  those  in  favor  of  the  sale  is  that 
the  city  should  not  own  a railroad  on  general  principles; 
that  it  would  not  be  worse  off  through  the  sale  than  at 
present ; and  that  if  the  road  passes  into  private  hands  it 
will  be  of  greater  usefulness  to  the  city  than  heretofore. 
The  new  owners  will  improve  the  road  and  would  look  to 
the  building  of  branch  roads  and  thereby  open  up  greater 
territory  to  the  commercial  interests  of  the  city.  As  far 
as  we  are  concerned,  we  stand  altogether  on  the  side  of  the 
opposition  to  the  sale.  The  argument  that  we  can  secure 
better  terms  later  appears  evident  to  us. 


108 


ustudeih:. 


Bonds — PAGE. 

Excess  interest  collected  by  Sink- 
ing Fund  Trustees 91 

M.  E.  Ingalls  on  same 92 

Interest  being  paid  on  cancelled  ..90 
Holders  of  $10,000,000  mu't  be 

protected 102 

$1,760,000  of  C.  S.  Ry.  cestroyed..91 

Refunding  of,  how  17,  35,  50,  53  88,  93 

“ “ amount  saved  by 35,  59,  88,  93 

When  mature 26,  35,  50,  53,  59,  88 

Bouscaren,  G.,  Consulting  Engineer  — 

Official  report  of  38-43 

Ample  protection  for  city 42-43 

Betterments 41 

Bridge  replacements 40 

Condition  of  ties 39 

New  buildings 40 

Rolling  stock  and  equipment 42 

What  remains  to  be  done  41 

Chamber  of  Commerce- 

Report  of  committee  3-8 

Vote  of .18 

Cincinnati  Southern  Railway— 

Ample  protection  for  the  city 42,  103,  1 4 

Betterments 41 

Bid  for. 

Bridge  replacements 40 

Commercial  Gazette 45 

Cost  of  building 37,  61,  63,  74,  85 

Condition  of 86 

Length  39 

New  buildings 40 

No  interruption  of  business ’of 98 

Number  of  bridges 86 

*'  “ tunnels 86 

Present  value 85,  101 

Rolling  stock  and  equipment 42 

What  it  will  do  for  Cincinnati 66,  77,  91 

What  the  people  want 97 

What  remains  to  be  done  41 

What  will  they  do  with  it  ? 96 

When  completed 85 

Why  built 33 


109 


PAGE 

Communications  to  tlie  Press- 

Civil  Engineer 61 

Crosley,  Powell 103 

Emery,  Thos.  J 65,  73,  76 

Fritsch,  L.  C.,  C.  E 33 

Harrison,  L.  B 

Huston,  R.  G 84-87 

Morrison,  Thos 

Smith.  Richard 43 

Taft,  Chas.  P.,  to  H.  J.  Appling, 

Chairman  Com.  of  B.  of  L. 53 

Decrying  Our  Own- 

Commercial -Gazette 57 

Enquirer  60 

Taft’s,  Chas.  P.,  letter 56 

Earnings 53,  76,  86 

Emery,  Thos.  J.,  on  the 96 

Editorials — 

Commercial-Gazette,  against  sale..ll,  16,  43,  5 ',  57,  64 

Enquirer See  Cover 

Times-Star,  “Raid  on  the 

Si  111116™’’ 19 

Volksblatt,  against  sale 71 

Freight  Bureau- 

Report  of  against  sale 23-‘  5 

Report  of  Executive  Committee 
as  to  effect  of  sale  on  taxation. ..87-89 


Gauge- 

Authority  to  change,  how  ob- 


tained  87-89 

Interviews— 

Abbihl,  J.J 107 

Alms,  F.  H 105 

Altenbcrg,  J.  P 107 

Boss,  Christian 105 

Brice,  C.  S 27 

Diem,  J.  F 107 

Emery,  Thos.  J 95 

Felton,  S.  M 29 

Ferguson,  E.  A 93,  94,  102 

Goshorn,  E.  C 78 

Hooker,  J.  J 97-100 

Huedepohl,  Louis 106 

Ingalls,  M.  E 51,  92,  93 

JeUe,  F 107 

Kleinschmidt,  Ed 107 

Langhorst.  H.  A. 106 

Mooney,  James  E 80,  81 


no 


Interviews.—  Continued. 


Muhlhauser,  Henry 

Mayer,  Theo 

Muth,  Chas.  F 

Overbeck,  W.  C 

Pfleger,  Julius  

Rasche,  Anthony  ... 

Rasche,  Marcus 

Smith,  H.  R 

Spencer,  Samuel 

Seasongood,  Louis  . 
Woodford,  M.  D 


PAGJS, 

.105 

.107 

.106 

.107 

.106 

.106 

.106 

.50 

28,  32 
100-102 

29,  32 


Tease— 

Conditions  fulfilled  45 

Loss  to  city  by  proposed  bid 70-71,  72 

Present  lease  all  right 75,  86,  87,  102 

Rental  under 36,  53,  73,  76 

Should  not  be  changed 66 

Taft,  Chas  P.,  on  perpetual 54 

When  terminated 36 

Offer  for  the  Road 67 

Bidders  without  legal  authority  ...81,  94 

Emery,  Thos.  J.,  on  drawbacks  in.95 
Howbidderspropose  topayfor  road75,  99,  104 

Only  one  bid 71 

Star-Chamber  method  of  receiving  80-96 

What  loss  to  city  under  70,  71,  75,  89,  96 

On  Top  is  the  City’s  Railroad— 77 


Rental— 36,  53,  73,  76 

Amount  paid 35,  70,  89 

No  default 98,  102 

Provides  for  interest  charges 77 

Reduction  of  proposed 60,  70,  71,  75,  78 

Reports— 

Bouscaren,  G.,  C.  E.,  on  physical 

condition  38-42 

Chamber  of  Commerce 3-8 

Freight  Bureau  23-25,  87-89 

Sale  ot  Cincinnati  South  ern  Railway — 

Bill  to  sell  rushed  through  legisla- 
ture   74 

Commercial  Gazette  opposes 16-18,  25,  57 

Crosley,  Powell,  opposes 103 

Discussion  by  Sinking  Fund  Trus- 
tees   63 

Emery,  Thomas  J 73-76 


111 


Sale  of  Cincinnati  Southern-- Continued, 


PAGE. 

Enquirer,  opposes Cover 

Ferguson,  E.  A.,  on  legal  status 94 

Goshorn,  E.  C.,  opposes  sale 79 

Hooker,  J.  J.,  opposes  sale 97-100 

Ingalls,  M.  E.,  opposes  sale 93 

Mooney,  James  E.,  opposes  sale. ..58-60 

Postponement  asked  for 82,  83,  104,  105 

Report  of  Committee  of  Freight 

Bureau  against 23 

Seasongood,  Louis,  opposed  to 100-102 

Taft,  Charles  P.,  opposed  to 53 

Times-Star,  opposed  to 61 

Volksblatt,  ooposed  to 71,  105-108 

Taxes— 

Effect  of  sale  on 87-89 

Emery,  Thomas  J 73 

Freight  Bureau’s  report  on 88 

Will  be  reduced 27,38,45,58,59,98 

Terminal  Facilities 47,  49,  86 

Claim  for  damages  against  City 
worthless  72 

What  will  the  City  get? 76 

Voice  from  the  Desert 65 


From  Cincinnati  Times-Star,  February  20,  1896. 


1;Jf. 


CINCINNATI. — “What  Others  Want  Must  be  a Good  Thing  for  Me  to  Keep.” 


